Tuesday, 10 April 2012

UEMLAND (FV RM3.17 0 - TRADING BUY) Corporate News Flash: Buying Back Land


THE BUZZ
Yesterday UEM Land has announced  on Bursa Malaysia that its wholly-owned subsidiary, Nusajaya Premier SB (NPSB), has entered into sale purchase  sale and purchase agreement with Tanjung  Bidara  Ventures SB (TVB)  - a wholly-owned subsidiary of Khazanah Nasional (Khazanah)  - in relation to the proposed acquisition of 122.28 acre parcel of freehold land located in Nusajaya, for total consideration of about RM93.2m. 

OUR TAKE
More on the deal. The proposed  acquisition  involves  the  acquisition  by  NPSB  from  TBV of a parcel of  freehold  land held under the title number HS(D) 500347, PTD 182860, in the Mukim of Pulai, district of Johor Bahru, measuring about 122.28 acres, or 5,326,416.61 sq ft, for a total cash consideration of RM93.2m, or RM17.50 psf. The land is a vacant parcel of freehold land currently classified as agricultural land, although it is designated for residential development. The land is strategically located in Nusajaya and is  some  40km to the south-west  of Johor Bahru  city  centre. It is also adjacent to Kota Iskandar and UEM Land’s existing prime development in Nusajaya,  being  Puteri Harbour, an integrated waterfront and marina development.

Buying back from Khazanah. The land forms  part  of  the  land  bank  totaling  4,500 acres  which  was  effectively disposed of to Khazanah as part of the degearing  of the UEM World  group  of  companies  in  2006. UEM World was previously the immediate holding company of UEM Land’s   wholly-owned  subsidiary,  UEM  Land  (prior  to  ULHB’s  listing  on  Bursa Malaysia 2008). The degearing was undertaken by the UEM World group with the intention to, among others, improve its gearing position via the disposal of landbank. With  the  significant  strengthening  of  the  UEM Land   Group’s  financial  position  and  operational   capabilities as well as the improved development landscape  amid  clarity of Nusajaya’s potential since  the  degearing  exercise,  UEM Land  believes  that  it  is  now  an  opportune  time  for  the group to re-acquire the land from Khazanah.

Our view. We are not entirely surprised the acquisition as UEM Land had previously indicated that it was considering buying back some land parcels from Khazanah in order to consolidate  the  strategic land parcels  that are  close to its existing development in Puteri Harbour. The proposed acquisition will also enable UEM Land to realize its original development vision for Puteri Harbour, where the high-density urban waterfront precincts at the heart of public and private marinas are balanced with landed and highrise residential precincts on both sides, with the land it plans to buy back being on one of the sides.

Source: OSK188

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