Hap Seng Consolidated Bhd will develop a mixed-use project in KL Metropolis on Jalan Duta in Kuala Lumpur with an estimated gross development value (GDV) of RM8.7 billion.
It has entered into an agreement with Naza TTDI Sdn Bhd's unit TTDI KL Metropolis Sdn Bhd (TLKM) to purchase 6.2 hectares (ha) of vacant commercial land known as Met 3, Plot 7A for RM868.8 million through its wholly-owned subsidiary Sierra Positive Sdn Bhd.
In a filing with the Bursa Malaysia yesterday, Hap Seng stated that the Met 3 land would be purchased with internally generated funds and bank borrowings.
According to Hap Seng, the acquisition is expected to be completed within seven months, strengthening the group's property development presence in KL Metropolis.
Naza Corp Holdings Sdn Bhd owns 80 per cent of Naza TTDI, the master planner for the 31ha RM20 billion KL Metropolis.
The Met 3 land deal is one of Hap Seng's few agreements with the Naza Group.
Hap Seng signed a development rights agreement with TLKM in January 2016 to develop KL Midtown on a 3.62ha site in KL Metropolis.
The KL Midtown development will include a retail podium, luxury residences, and a hotel. It has a GDV of RM3.8 billion in total.
After four years, Hap Seng collaborated with TLKM to bring the global hotel brand Hyatt Regency to KL Midtown.
The five-star hotel is being built by KL Midtown Sdn Bhd, a 70:30 joint venture between Hap Seng and TLKM. It is scheduled to open in 2024.
It will have 450 rooms and a market café, restaurant, bar, club, outdoor pool, fitness centre, and meeting space.
Hap Seng stated that the Met 3 land would cost RM7 billion to develop a mixed-use project.
The group is confident that the land's connectivity and accessibility will benefit future project launches and generate long-term revenue and profitability for its property development business.
The Met 3 land is located next to the Malaysia International Trade and Exhibition Centre (MITEC), Malaysia's largest exhibition centre, which opened in 2017.
"KL Metropolis is one of the most sought-after addresses in the Klang Valley, surrounded by the prestigious townships of Damansara Heights, Sri Hartamas, Mont Kiara, and Bangsar.
"Home to the largest trade and exhibition centre in Malaysia, various plans to further improve connectivity within and around KL Metropolis are already underway," it said.
According to Hap Seng, based on its audited consolidated financial statements for the fiscal year ended December 31, 2020, assuming that the Met3 acquisition is completed at the end of the fiscal year, the group's net debt-to-equity ratio would have increased from 0.41 times to 0.51 times.
Market demand and conditions, government approvals, a labour shortage in the construction industry, fluctuating building material prices, and any unforeseen delay caused by the Covid-19 pandemic are all risks for the proposed acquisition.
