KUALA LUMPUR (June 26): Sunway Bhd is disposing of its 30% stake in a joint venture (JV) Hoi Hup Sunway Novena Pte Ltd (HHSN) to Hoi Hup Realty Pte Ltd for S$39.88 million (RM118.2 million) cash.
HHSN was set-up in December 2012 to undertake the Royal Square at Novena development in Singapore, which comprises a hotel, medical units and retail units. Royal Square at Novena was successfully completed on July 12, 2017, with HHSN recording accumulated profits of S$132.5 million from the project.
In a statement today, Sunway said the proposed disposal marks the completion of the project and will enable Sunway to exit and monetise its investment in HHSN.
The group intends to use proceeds from the proposed disposal for its new projects, as well as new land bank acquisitions, to strengthen its property development presence in Singapore.
In a separate filing with Bursa Malaysia today, Sunway said its wholly-owned property development unit in Singapore, Sunway Developments Pte Ltd, has entered into a sale and purchase agreement (SPA) with Hoi Hup for the proposed disposal.
The exercise is expected to be completed on June 30.
Sunway said the estimated loss on disposal arising from the proposed disposal is S$100,000, after taking into consideration the net book value of Sunway’s investment in HHSN as at March 31, 2018 of S$40 million.
"In addition, under the terms of the SPA, Sunway may be able to receive further payment in the form of the earn-out, if any," it added.
Notwithstanding the disposal of the stake in HHSN, Sunway said it has retained an entire floor of medical suites in Royal Square at Novena, with total floor area of 8,500 sq ft, with the aim of establishing Sunway Medical’s maiden presence in Singapore.
"Targeted to commence operations by end 2018, Sunway Medical Singapore is envisaged to be a collection of clinics, housing doctors in various specialisations and a wellness centre," Sunway said.
Sunway shares closed down 6 sen or 3.75% to RM1.54 today, bringing a market capitalisation of RM7.58 billion.