Lee Rubber puts yet another asset up for sale

This article first appeared in The Edge Malaysia Weekly, on October 2, 2017 - October 08, 2017.
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SINGAPORE’s Lee Rubber Co (Pte) Ltd, which has in the past five years sold assets in Penang, Kuala Lumpur and Johor, is seeking to dispose of its freehold land in Rawang, Selangor, for as much as RM40 million.

The land — four contiguous lots measuring 30.8 acres — is located off Jalan Rawang and is a short walk from Tesco Rawang. The parcel is categorised as agricultural but is zoned for residential — suggesting there is potential for development.

An information memorandum (IM) about the land, sighted by The Edge, reveals that property consultancy firm Rahim & Co has been hired as the exclusive marketing agent to handle the sale. However, officials from the firm declined to comment when contacted.

According to two separate sources, the land, which measures 1.34 million sq ft, could fetch RM25 to RM30 psf or RM33.5 million to RM40 million.

The sale of the land is by way of Expression of Interest (EOI). EOI, unlike an offer made through a tender, gives both parties the option to not proceed with the deal.

The IM points out that the land adjoins an ongoing residential project called Legend View Rawang, is accessible from Jalan Rawang, and has easy access to the Kuala Lumpur-Kuala Selangor Expressway.

The final date for the submission of the EOI is Nov 9.

The vacant land is registered in the name of Lee Rubber (Selangor) Sdn Bhd. A search on the Companies Commission of Malaysia website shows that the company, whose nature of business is described as rubber trading and export, was registered in 1960.

The shareholders are Lee Latex (Pte) Ltd, holding a 7.49% stake, and Lee Rubber Co (Pte) Ltd with 92.51%. The directors of the company are Malaysian nationals Ng Kok Hwee, Lee Seng Chuan and Teo Soon Huat, and a foreign national residing in Singapore, Huang Thiay Sherng.

Based on the company’s latest available financials, in the financial year ended Dec 31, 2015, Lee Rubber (Selangor) posted a net profit of RM4.5 million on the back of RM188.04 million in revenue. As at the same date, total liabilities were RM6.86 million of which RM6.79 million were current.

This sale comes just six months after Lee Rubber placed two of its assets in George Town, Penang — a shopoffice and a warehouse — up for sale for an estimated RM40 million. The shopoffice and warehouse occupy 39,940 sq ft of freehold land that consists of three adjoining plots of 13,600 sq ft in total, and across a small lane, one big parcel of 26,340 sq ft. The small parcel houses the two-storey shopoffice while the warehouse occupies the larger piece of land.

The parcels have been zoned as commercial and offer redevelopment potential as they are unutilisied. The Edge understands that a deal to sell this property has yet to be inked.

A year ago, in October, Lee Rubber sought a buyer for a parcel near Jalan Raja Chulan in Kuala Lumpur. A development order for two blocks of serviced apartments on the 1.81-acre tract has already been obtained. It was reported that the land could fetch RM2,200 to RM3,200 psf, which translates into RM170 million to RM250 million.  

There has been no news on the sale since the close of the tender on Nov 8 last year.

Lee Rubber, which has had a presence in Malaysia for the past nine decades, has land stretching from the north of the peninsula in Kedah to the south in Johor. Should the recent assets put up for sale fetch the price the owners are hoping for, the total asset sales by the Lee Rubber group over the past five years may cross RM1 billion.

Last year alone, it sold three of its assets. In January 2016, the Lee Rubber Building in Jalan Tun HS Lee in Kuala Lumpur was sold to Singapore-based GF Land Sdn Bhd for RM29 million.

The second sale was a 121.19-acre tract in Kulai, Johor, for RM123.64 million to Scientex Bhd subsidairy Scientex Quatari Sdn Bhd. The group also realised its investment in Glengowrie Rubber Co Sdn Bhd when Sime Darby Bhd sold 805 acres in Hulu Langat, Selangor, for RM428.84 million to I&P Group Sdn Bhd. Lee Rubber had a 2.8% stake in Glengowrie.

Lee Rubber was founded by the late rubber tycoon and philanthropist Tan Sri Lee Kong Chian, who was once dubbed the rubber and pineapple king. Lee and a friend set up a rubber smokehouse in Muar, Johor, in 1927. The group’s business later expanded to include the manufacture of biscuits.

It is unclear why Lee Rubber has been selling these assets.  Industry observers note that it looks like it is exiting the country, but they were quick to point out that the group has a very large portfolio of assets given its 90 years in the country. Moreover, several of the assets that are being divested are vacant land or buildings. Property agents have suggested that the group has previously said it would sell if the price was right.