KUALA LUMPUR: UOB Kay Hian Malaysia Research expects the new Iskandar Waterfront Holdings Sdn Bhd (IWH) company will still be a low-geared asset-heavy company.
It said on Monday Iskandar Waterfront City Bhd
’s (IWC) board had accepted IWH’s share exchange proposal, paving the way for IWH to take over the listing status of IWC, and thus creating one of the largest real estate companies in terms of landbank.
“Despite the exclusion of the prized Bandar Malaysia development, the new-IWH would still be a low-geared asset-heavy company with over RM29.5b (RM5.69/share) worth of land under its umbrella,” it said.
Last week, TRX City Sdn Bhd announced that the share sale agreement entered between the Government through TRX City, IWH and China Railway Engineering Corp (M) Sdn Bhd (CREC) had lapsed
In an updated corporate exercise, IWC board announced that it has accepted the share exchange proposal initiated by IWH.
Post completion of the share exchange, IWH would eventually take over the listing status of IWC (new-IWH). The new-IWH is poised to be a giant real estate company with total landbank value of over RM29.5b on over 6,700 acres of land in Johor Bahru, making it the third largest real estate company by landbank area (third to Sime Darby Property and UEM Sunrise).
UOB Kay Hian Research said aside from the potential exclusion of the prized Bandar Malaysia development that was announced last week, other changes include: a) the minorities of Iskandar Waterfront (IWSB) (which is ultimately the Ministry of Finance) the proposal to inject RM2.6bil worth of assets, b) a higher injection value by Tan Sri Lim Kang Hoo (+RM194mil) and c) higher injection value by Johor’s Sultan Ibrahim (+RM119mil).
The rejection by minorities of IWSB would result in the lesser number of shares and RCPS to be issued.
IWC also announced that it entered into a supplemental agreement with Greenland Holdings Group which would see the land sale being completed in six different tranches, rather than a single mammoth-sized RM2.4bil transaction.
According to the company, this is to facilitate and expedite approval processes for disposals that would take a longer period if done on a lump-sum basis.
The first tranche of payment is expected to be received in July 17, amounting to RM46mil, with subsequent tranches to come every quarter thereafter.
“Even without Bandar Malaysia, the open market value (OMV) of new-IWH land is over RM29.5bil. Based on available information, the open market value (OMV) of 6,773 acres of land in Johor Bahru is estimated at RM29.5bil, which implies a psf pricing of around RM100psf.
“While we do not have exact details on the locations, it is understood that a good portion of the land are city-centric, particularly on the Danga Bay strip. To compare, a few notable transactions that were done in Johor Bahru city include R&F’s 116-acre acquisition (at RM890psf) and Country Garden’s 55-acre acquisition (at RM376psf) which were done in 2013 and 2012 respectively,” it said.
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