This article first appeared in The Edge Malaysia Weekly on July 13, 2020 - July 19, 2020
AMID concerns over the impact of the Covid-19 pandemic on the economy and how long it will take some industries to recover, Boustead Properties Bhd has inked a deal to sell a 2.93-acre parcel in Jalan Cochrane, Kuala Lumpur. The site has been up for sale since November last year.
Located near MyTown shopping centre, the plot has been sold to Binastra Land Sdn Bhd for RM138 million, and is likely to emerge as a significant property transaction this year based on the per sq ft price.
“We can confirm that the parcel of land known as Lot 20005, comprising 2.93 acres located opposite MyTown shopping centre, is in the process of being sold. The sale and purchase agreement was signed on June 12, 2020, and the deposit of 10% has been secured,” a Boustead Properties spokesperson tells The Edge when asked to confirm talk that the land had been sold. Boustead Properties is wholly-owned by Boustead Holdings Bhd.
In December, The Edge reported that Boustead was seeking RM147 million or RM1,152 per sq ft for the 127,630 sq ft freehold plot with a plot ratio of four. The land is located at the intersection of Jalan Cochrane and Jalan Shelly.
While Boustead Property did not reveal the sale price, Binastra Land CEO and managing director Datuk Seri Michael Tan tells The Edge that the deal was done at RM138 million, which works out to RM1,081 psf.
“It is a good sell for the owner (Boustead) as it managed to sell at about RM1,000 psf, especially in this market,” a valuer who declined to be named tells The Edge. He pegs the land value in the area at between RM700 and RM800 psf.
But Tan, who plans to develop the land in two to three years’ time, says, “Prime land does not come cheap.” Binastra Land plans to build a hotel and serviced apartments, with a small office component, on the site. “The development will complement the MyTown development,” he adds.
Boustead was also mum on the gain on disposal, but says, “Given the current economic environment, we are of the view that the sale consideration is fair and will contribute positively to the group’s cash flow.”
In December, Boustead Properties said the sale was aligned with Boustead’s continuous drive to effectively manage its assets and extract the best value from its investments.
The Jalan Cochrane land is registered under Mutiara Rini Sdn Bhd, which is owned by Boustead Properties except for 1,000 shares held by Boustead Holdings Bhd. Mutiara Rini has held the land, designated for commercial use, since November 2012.
In the financial year ended Dec 31, 2018, Mutiara Rini registered a 16.5% year-on-year decline in revenue to RM266.39 million. Net profit, however, improved 43.68% to RM137.79 million. Total liabilities stood at RM995.61 million, of which RM985.83 million were current, while retained earnings amounted to RM608.99 million.
The Jalan Cochrane land deal was brokered by Rahim & Co. When contacted, real estate agency CEO Siva Shanker says he considers the deal as significant as it shows that in spite of the pandemic and the negative impact of the lockdown, savvy developers and investors will still put money into prime assets. He observes that the site is located 4km from KLCC, which is now considered the city centre. Tun Razak Exchange (TRX) is being marketed as the next financial hub, so when it begins to gain traction, it could become the new city centre. Jalan Cochrane will then be even closer to the “new” city centre.
What is Binastra Land? It refers to itself as a lifestyle developer and currently has ongoing projects with a gross development value (GDV) of RM1.6 billion. It is developing the RM1 billion GDV Trion@KL on the former site of the Volkswagen showroom in Sungei Besi and a RM500 million GDV project called CitiZen 2 on Old Klang Road.
Based on the latest financials available on the Companies Commission of Malaysia’s website, Binastra posted a revenue of RM224 million and a net profit of RM40.74 million in its financial year ended Dec 31, 2018. The company also has total retained earnings of RM58.81 million and total liabilities of RM312.65 million, of which RM228.37 million are current.
The shareholders of the company are Lee Thian Yew (19.63%), Rakan Destar (M) Sdn Bhd (18.4%), Everise Bond (M) Sdn Bhd (18.4%), Tan (16.29%), Timeless Accomplishment Sdn Bhd (16.56%), Tan Nge (5.8%), Golden Fulfilment Sdn Bhd (3.07%) and Shining Objective Sdn Bhd (1.84%).
Separately, when asked about the status of the sale of the Royale Chulan Bukit Bintang to Singapore-listed Hotel Royal Ltd for RM197 million, the Boustead Properties spokesperson says the purchaser remains keen to complete the purchase of the asset at that price because of its location. This is despite the current spate of hotel closures, which could put pressure on the value of the asset.
“The deal is very much alive. The purchaser is going through due process to fulfil the conditions precedent,” the spokesperson says. The sale and purchase agreement was signed on March 15, 2019.
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