KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) is acquiring a 7,552.2 sq m piece of land in Jalan Kia Peng here, which previously served as the site for the official residence of the German ambassador to Malaysia until June 2013, for RM259.16 million or RM3,188 per sq ft.

In a filing with Bursa Malaysia yesterday, MRCB (fundamental: 0.9; valuation: 0.9) said the acquisition of the 1.8661 acres (0.75ha) of freehold land would help the group grow its property development operations.

The group said it had won the tender via a competitive bid called by the German government for the German Embassy land on Jan 26 this year.

“The tender price of RM259.16 million is about 6% higher than the market value of the land based on the appraisal conducted by C H Williams Talhar & Wong, and Raine & Horne International Zaki & Partners,” said MRCB.

“The price was arrived at after taking into consideration, among others, the scarcity of freehold land in the highly sought-after address of Jalan Kia Peng, the development potential of the land arising from its established location in the high-end area with good accessibility and close proximity to the Kuala Lumpur City Centre, and comprehensive range of amenities and facilities,” it added.

Legasi Azam Sdn Bhd, a wholly-owned subsidiary of MRCB Land Sdn Bhd, which in turn is a wholly-owned unit of MRCB, had yesterday signed a sale and purchase agreement with the German government for the proposed acquisition, which is expected to be completed by early August this year.

MRCB said it would fund the proposed acquisition via bank borrowings and/or internal funds.

The German Embassy land comes with a house with attached staff quarters and a swimming pool.

In a statement yesterday, MRCB group managing director Tan Sri Mohamad Salim Fateh Din said land prices would not pose a challenge to the group as it is able to innovate by strategic planning and value creation for its property projects.

“The supply of land is inelastic and the cost of land banking will continue to rise, but land banking is an ongoing process for all developers like MRCB because it is crucial for business growth.

“To address rising costs, we have continually introduced new concepts, ideas and innovative features in our development with better construction cost efficiencies and new construction technologies,” said Mohamad Salim.

MRCB shares closed 1.63% higher at RM1.25 yesterday, bringing a market capitalisation of RM2.23 billion.

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. Go to www.theedgemarkets.com for more details on a company’s financial dashboard.

This article first appeared in The Edge Financial Daily, on April 8, 2015