This article first appeared in The Edge Malaysia Weekly on April 3, 2017 - April 9, 2017

SINGAPORE’s Lee Rubber Co (Pte) Ltd is continuing its selling spree by putting up for sale two of its assets in George Town, Penang — a shopoffice and a warehouse — that are valued at RM40 million.

With this move, the value of assets sold by the Lee Rubber group and those available for sale over the past four years totals about RM1 billion.

The Edge understands that the shopoffice and warehouse occupy 39,940 sq ft of freehold land that consists of three small adjoining plots of 13,600 sq ft in total and, across from these, one big parcel of 26,340 sq ft. The smaller parcel houses the two-storey shopoffice while the warehouse occupies the larger piece of land.

Based on a property brief circulated to potential purchasers, Rahim & Co has been appointed the exclusive agent for the properties bearing the addresses No 1, Gat Lebuh Noordin (warehouse) and No 49 Jalan CY Choy (shopoffice), which are located within walking distance of Penang’s Komtar Tower and are being marketed as having redevelopment potential.

When contacted, Rahim & Co director of real estate agency Robert Ang declined to comment or confirm if the properties are owned by Lee Rubber.

A property brief is generally sent out to interested parties before a more detailed information memorandum is provided and a non-disclosure agreement is signed by the interested party.

The property brief further states that the said parcels have been zoned as commercial and offer redevelopment potential as they are currently not fully utilised. There is also the possibility of increasing the plot ratio to a maximum of five.

According to the document, the two properties are close to a high-traffic tourist zone on the fringes of George Town’s Unesco World Heritage Site. “They are just outside the popular ‘Seven Streets Precinct’ that is famous for its neighbourhood street food hawkers and Penang’s largest wet market,” it says.

The properties are also within walking distance of 1st Avenue Mall, Khoo Khongsi Clan House, Guan Yin Temple, St George’s Church and Masjid Kapitan Keling, and are visible from the Tun Dr Lim Chong Eu Expressway.

The sale of these assets is by expression of interest, which is generally non-binding and allows both parties to not proceed with the deal. Interested parties also need not put in an offer price. Instead, they can write in that they are interested and negotiate a deal later.

Both the shopoffice and the warehouse are believed to be leased out at the moment.

Meanwhile, The Edge was able to identify the parcels as belonging to Jua Sinaran Sdn Bhd. A search on the Companies Commission of Malaysia’s website reveals that the company, incorporated in August 2006, is wholly owned by Lee Rubber. The company’s nature of business is described as investment and property holdings.

The directors of the company are Lee Seng Chuan@Leei Siong Chuan and Ng Wai Hung. Based on the latest financials available, in the financial year ended Dec 31, 2015, Jua Sinaran made a net profit of RM155,160 on revenue of RM318,383. As at Dec 31, 2015, it had accumulated profits of RM989,198 and current liabilities of RM104,917.

While it is not clear why Lee Rubber is selling the two assets, it is understood that the group has identified more assets for sale.

“Lee Rubber is divesting its non-strategic assets,” says a source.

Market talk has it that the recent spate of asset sales by Lee Rubber (see table) may signal its exit from Malaysia or that the land involved no longer serves its original purpose. People familiar with the group say more of its land in Johor may have been earmarked for sale.

While it is understood that Lee Rubber has land and assets from Kedah to Johor, a large portion of these is believed to be in the latter, possibly due to its proximity to Singapore where Lee Rubber’s history can be traced back to 1927.

Lee Rubber founder Tan Sri Lee Kong Chian set up his first venture in Muar. In the 90 years that the company has had a presence across the Causeway, its business has expanded to include pineapple cultivation and the manufacture of biscuits. Lee was also involved in the merger that formed OCBC Bank Ltd.

The list of assets sold by the group over the last four years includes Lee Rubber subsidiary Luxor Precision Sdn Bhd’s disposal of four parcels totalling 24.46 acres in Jalan Paya Terubong to Sunway City (Penang) Sdn Bhd for RM267.42 million. Sunway has planned an integrated project with a gross development value of RM2.5 billion on the site. It is not known if Lee Rubber has sold any other properties in Penang.

Last year alone, the group sold three of its assets. One was the Lee Rubber Building on Jalan Tun H S Lee in Kuala Lumpur, which was sold to Singapore-based GF Land Sdn Bhd for RM29 million in January.

Another was the group’s investment in Glengowrie Rubber Co Sdn Bhd, which was realised when Sime Darby Bhd, as the majority owner of the land, sold two parcels totalling 805 acres in Hulu Langat, Selangor, for RM428.84 million to Petaling Garden Sdn Bhd, a wholly-owned subsidiary of I&P Group Sdn Bhd.

Lee Rubber had held a 2.8% stake in Glengowrie via its stake in Chermang Development (Malaya) Sdn Bhd.

The third asset to be sold was a 121.19-acre parcel in Kulai, Johor, for RM123.64 million to Scientex Bhd’s subsidiary Scientex Quatari Sdn Bhd through a company called Dahlia Utama Sdn Bhd. Scientex is planning a mixed-use development on the land.

But this is not the only piece of land that Lee Rubber disposed of in Johor. In April 2015, Iskandar Waterfront City Bhd inked a deal to purchase 67.54 acres in Taman Sutera Utama in Pulai, Johor Baru, for RM155.94 million. The deadline to conclude the deal, which was supposed to have been the end of February this year after several extensions, has been extended yet again. In an announcement to Bursa Malaysia, IWC announced a “further and final extension until March 31, 2017, to complete the purchase”.

Meanwhile, in October last year, Lee Rubber invited bids for a 1.81-acre plot in Jalan Raja Chulan, Kuala Lumpur. The tender closed on Nov 8 last year but the sale has yet to be concluded. It was reported that the plot, which already had a development order, could fetch as much as RM250 million.

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