This article first appeared in The Edge Malaysia Weekly on February 24, 2020 - March 1, 2020

PROPERTY developer UEM Sunrise Bhd (UEMS) has placed multiple assets in Kuala Lumpur estimated to be worth between RM600 million and RM700 million up for sale.

The Hyatt House Kuala Lumpur hotel in Mont’Kiara, a 65-acre land parcel in Seri Kembangan and a parcel in Seputeh, Kuala Lumpur, are believed to be among the larger assets.

The move could be part of the group’s plans to divest its non-strategic assets and rebalance its land bank portfolio.

According to sources, UEMS hopes to fetch about RM270 million and RM250 million respectively for Hyatt House and the 65-acre piece of land, while the Seputeh land may be worth about RM25 million.

“UEM is also looking at disposing of a few other assets, including several retail components in Mont’Kiara and land in Iskandar Johor,” an industry source tells The Edge.

Another industry player says that UEMS plans to dispose of land in Klang, Selangor, too.

The Edge has also learnt that real estate agencies were approached in recent months to seek buyers for some of the assets while a number had been asked to submit a request for proposal.

Two weeks ago, The Edge noticed an advertisement for the sale of a 65-acre parcel in Seri Kembangan. Real estate agency CBRE | WTWhas been hired as the exclusive marketing agent and is conducting the exercise via an expression of interest. The closing date for the sale is March 30.

When contacted, UEMS confirmed that the land advertised for sale belonged to the group and that it had been available since 2018. However, the company did not respond to questions on the sale of its other assets.

“We will be sharing more details on our business and company performance when we unveil the financial results for 4Q2019 next week [Feb 24],” UEMS adds.

The land — marketed as a strategic residential and commercial development land — is located near the Australian International School Malaysia, Mines Shopping Mall and South City Plaza. It also has easy access to the SILK highway, North-South Expressway and Sungei Besi Expressway.

One industry source pegs the price of this parcel at between RM70 and RM90 psf while a valuer says land in the area is valued at about RM60 to RM70 psf. This would mean that the parcel, measuring 2.83 million sq ft, could be worth between RM169 million and RM255 million.

According to UEMS’ annual report for the financial year ended Dec 31, 2018, the Seri Kembangan land is a leasehold parcel acquired in June 2011.

Hyatt House opened for business in December 2018. The hotel is a 298-room facility with fully equipped kitchen suites. At the time of opening, it was reported that the hotel was the largest Hyatt House branded property for Hyatt Hotels Corp, with a gross floor area of 267,776 sq ft and a net lettable area of 198,241 sq ft.

Hyatt House is part of Arcoris Mont’Kiara, which has a gross development value of RM1.2 billion. Other components in the development include Arcoris Suites, Arcoris Soho, Arcoris Residences and Arcoris Plaza.

A property source says that the sale of Hyatt House could be a challenge as the hotel is located within a building that also houses strata offices and small-office-home-office units.

The Seputeh parcel, meanwhile, measures 1.88 acres and has been zoned for residential use. It is freehold land with a 40 unit-per acre plot ratio. Residential land is usually measured based on persons or units per acre. Property industry experts peg the value of the land at between RM300 and RM350 psf. This means the 81,893 sq ft parcel could be worth between RM24.57 million and RM28.66 million.

At the same time, The Edge has learnt that a penthouse in Plaza Mont’Kiara is available for sale and that UEMS is also looking for buyers for retail space it owns at Banyan Walk, also in Mont’Kiara.

In its FY2018 annual report, UEMS said that it had recognised a total of RM457.4 million from the disposal of non-strategic land in that financial year and would continue to identify non-strategic land and assets for disposal as a means to raise funds.

It is worth noting that a report late last year said UEMS and EcoWorld Development could merge via a share swap. However, UEM announced on Nov 22 that it had not made or received any corporate proposals on a potential merger with Eco World Development.

An industry expert tells The Edge, “Many developers are at a selling phase as they know that they cannot do many projects now as demand will be subdued. So, they might as well let go of the land parcels and it would be better to do so before prices hit rock bottom.”

In the nine months ended Sept 30, 2019, UEMS recorded revenue of RM1.75 billion, up 35% from the previous corresponding period, owing to revenue from property development and the completion and settlement of Aurora Melbourne Central and Conservatory.

Net profit for the period amounted to RM97.56 million compared with RM260.25 million in the previous corresponding period owing to earnings contribution from land sales of RM211 million in 9M2018. As at Sept 30, the company’s short and long-term borrowings stood at RM3.76 billion. As at the same date, UEMS also had property sales and unbilled sales of RM720 million and RM2.4 billion, respectively.

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