KUALA LUMPUR: Ingenieur Gudang Bhd's wholly-owned unit MGudang Properties Sdn Bhd (MPSB) signed a conditional sale and purchase agreement with Paradise Boulevard Sdn Bhd (PBSB)for the acquisition of 149 units of the retail and commercial complex for RM9.07 million.
The property investment is expected to yield long-term rental income by capitalising on the growth of e-commerce domestically.
Executive director Melvin Lim said the company has constantly been looking for properties that can generate recurring income in the long run.
"Thus, the acquisition is consequential and complementary to the company's strategy to identify, invest in, and develop potential properties for capital appreciation and rental income," said Lim.
MPSB will be acquiring a gross property floor area measuring approximately 435,002 sq ft out of 489,489 sq ft which is comprised of retail lots, a car park, and a rooftop.
A filing with Bursa Malaysia showed that the acquisition would be satisfied in cash via a combination of borrowings, proceeds from the disposal of properties, and internally generated funds, the proportion of which will be determined later.
Barring unforeseen circumstances, the proposed acquisition is expected to be completed by the first quarter of 2023.
Post-acquisition, MPSB will incur further costs to modify, refurbish, and repurpose the property into storage and warehouse.
The company said the additional cost is subject to further assessment of contractor costs based on design, specifications, and volume of repair works.
Lim said that value appreciation is crucial for property investment, and the company can achieve the result through capitalising on its know-how to develop and repurpose the use of existing buildings.
"Our management is of the view that the continued growth of online presence with e-commerce by micro, small and medium enterprises leads to a growing adoption of online-to-offline (O2O) commerce and the need for storage space for their products," he said.
Lim added that the commercial complex would be repurposed as a warehouse to provide useful storage services, especially for up-and-coming manufacturing and lifestyle industrial players focusing on e-commerce.