KUALA LUMPUR (Apr 3): Johor government-linked Iskandar Waterfront City Bhd (formerly known as Tebrau Teguh Bhd) said it is disposing of three contiguous pieces of freehold land in Plentong, Johor, which collectively measures some 127.92 acres (51.77ha), for RM2.37 billion or approximately RM426 per sq ft.

In the property developer's filing with Bursa Malaysia today, these lands are currently held by its wholly-owned subsidiary Tebrau Bay Sdn Bhd (TBSB).

TBSB, according to Iskandar Waterfront, entered into a conditional sale and purchase agreement with Greenland Malaysia Real Estate Operator Sdn Bhd today for the proposed disposal. 

The disposal is part of the joint-venture deal with Shanghai state government-linked Greenland Group that was inked on Jan 21, 2015, to develop the Tebrau Bay Waterfront City. Under the deal, Greenland Group will acquire the lands from Iskandar Waterfront City (fundamental: 1.65;  valuation: 1.5) under Phase 1 of the project, which will showcase a snow world theme park, an opera house, a hospital specialising in Chinese traditional medicine and a school.

The development is to be undertaken by a special purpose vehicle (SPV) known as Greenland Tebrau Sdn Bhd. Iskandar Waterfront City will hold 20% of the SPV via its wholly-owned unit Southern Crest Development Sdn Bhd, while Greenland will have the remaining 80% via Greenland Malaysia Real Estate Operator Sdn Bhd. 

Of the total land area of the three parcels, 78.57 acres are partially submerged while 48.68 acres are submerged land. TBSB will undertake the reclamation of the submerged portion, which is estimated to cost it RM557 million.

Iskandar Waterfront City said the proceeds of the disposal will be utilised for reclamation works, repay bank borrowings, working capital as well as other land-related expenses.

Currently, Iskandar Waterfront City has a gearing ratio of 0.13 times, subsequent to the disposal, the group is expecting to decrease it to 0.06 times.

"Upon completion of the proposed land disposal, it is expected that the Iskandar Waterfront will recognise a gain of approximately RM1.2 billion (after taxation) or approximately RM1.80 sen per ordinary share of 50 sen each in Iskandar Waterfront," the group explained.

Iskandar Waterfront City estimates the deal to be completed by the first quarter of 2018.

The group's share prices appreciated four sen or 3.36% to RM1.23 today, valuing it at RM823.76 million.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)