KUALA LUMPUR (Dec 19): Boustead Holdings Bhd is buying multiple pieces of leasehold commercial land measuring a collective 10.74 acres adjacent to Bukit Jalil City to develop a mixed development project with estimated gross development value of RM333 million.

The diversified group is acquiring the land from its single largest shareholder — the Armed Forces Fund Board (LTAT), which held a 60.92% stake in the group — for RM172.78 million, to be satisfied entirely by the proceeds from its rights issue exercise completed on June 23.

The purchase consideration took into the consideration the valuation carried out by Nawawi Tie Leung Property Consultants Sdn Bhd of between RM161.7 million and RM171.4 million as stated in a valuation report dated Nov 25.

According to Boustead, the 10.74-acre lands comprised a parcel of vacant commercial land measuring 5.75 acres, a parcel of vacant carpark land measuring 0.96 acre and 70 parcels of vacant terraced commercial shop plots measuring 4.03 acres. All land leases expire on April 25, 2095.

Boustead told the stock exchange today that LTAT had been granted a development order by Kuala Lumpur City Hall (DBKL) on May 16 this year for a mixed development comprising commercial plots, car park plots, subdivided plots for shop offices and other ancillary structures.

"The development is expected to commence in the last quarter of 2017. The development is expected to be implemented over a period of three years," said Boustead in a bourse filing.

On the gross development cost, Boustead estimated it to be RM297 million, hence the project should generate RM36 million in gross development profit.

Boustead will fund the development via internally generated funds and/or bank borrowings.

The diversified group said the land acquisition will allow it to expand its land bank and invest in strategic property development projects in Kuala Lumpur.

It said it will develop the lands into a commercial hub comprising 70 units of shop offices and a retail centre with a dedicated car park area, believing that the surrounding commercial developments, which include the proposed Pavilion Bukit Jalil and Bukit Jalil City condominiums, would act as catalysts for retail activities in the vicinity.

The proposed acquisition is conditional upon the approval of the relevant state authority for the transfer of the lands to Boustead.

"The application to the relevant state authority is expected to be made in the first quarter of next year," said Boustead.

Barring unforeseen circumstances, the group targets to complete the acquisition before the end of 2017.

Shares in Boustead gained five sen or 2.13% to settle at close to a seven-month high of RM2.40 after 1.08 million shares were traded. The current price valued the group at RM4.87 billion.