Mah Sing scraps Shah Alam deal, buys land in KL, Bukit Mertajam for RM300m

PETALING JAYA: Mah Sing Group Bhd is aborting a nearly three-year initiative to develop an 85.43-acre site at the Sultan Salahuddin Abdul Aziz Golf Course in Shah Alam, Selangor, into a high-end project, and is spending more than RM300 million to buy land on Jalan Cheras, Kuala Lumpur, and in Bukit Mertajam, Penang.
Mah Sing told Bursa Malaysia yesterday it has signed a share sale agreement with Hazreeq Putra Hasman and Maslinda Othman for their shareholding in Cordova Land Sdn Bhd, a company which has secured the acceptance of Kuala Lumpur City Hall for the purchase of an 11.233-acre piece of land on Jalan Cheras for RM82.127 million. The land houses the 27-year-old Stadium Badminton Kuala Lumpur.
The total consideration for the transaction is up to RM263.477 million which will comprise the share sale, land and reconstruction and upgrading costs of the badminton stadium. The upgrade is estimated to cost RM25 million.
Mah Sing projects a gross development of RM2.2 billion for the area, which will be turned into an integrated development named M Vertica with an indicative price of RM450,000 a unit or RM529 per sq ft.
The group said the total consideration of up to RM263.477 million represents a 21% discount to the land’s market value.
Mah Sing told Bursa Malaysia it was unable to go ahead with the RM327.477 million Shah Alam deal after numerous attempts to obtain approval for a land category change from building to residential and transfer the land to Mah Sing’s subsidiary Enchanting View Sdn Bhd failed.
It said the termination will help it focus on building affordable homes, particularly in the Klang Valley. The group has 33 on-going projects which are in various stages of the development life cycle, providing growth and earnings visibility for at least the next eight years.
Mah Sing said the deposit of RM32.747 million with vendor Great Doctrine (M) Sdn Bhd for the land will instead be forwarded to Waz Lian Properties Sdn Bhd as part payment for freehold vacant development land in Bukit Mertajam, Penang. The total consideration for the land is RM43.8 million.
Great Doctrine and Waz Lian are related companies by virtue of having a common controlling shareholder.The land will be developed into an industrial business park with a gross development value of RM150 million.

The proposed development is scheduled for a preview in the third quarter of 2017 and is to be developed over three to four years.
Mah Sing said it will finance the deals with a combination of internally generated funds and bank borrowings and/or proceeds raised from its unrated senior perpetual securities programme.
The group also announced that it would be selling its controlling stake in a property developer in Sabah, Convention City Development Sdn Bhd, for RM6.55 million, after plans for it failed to take off.
Mah Sing said it made a gain of RM4.9 million from the deal, which will be redeployed to the group’s other on-going property development projects and/or for other landbanking opportunities, particularly in the Klang Valley, as the group is focusing on increasing its presence in the Klang Valley to 75% within the next two to three years.
The Jalan Cheras land acquisition puts the group’s overall remaining GDV in the Klang Valley at 67%.
Mah Sing share price eased 3.09% or 5 sen at RM1.57 yesterday, with 729,200 shares traded. Its market capitalisation stood at RM3.783 billion.