Key takeaway: The acquisition, according to Sime Darby Property, is in line with the group's SHIFT25 strategy to transition from a pure play property developer to a real estate company by broadening and diversifying income streams.
Sime Darby Plantation Bhd is selling 949 acres of freehold land in Kapar, Klang for RM618 million to Sime Darby Property Bhd.
The transaction is the result of one of nine call option agreements signed by both companies in 2017, when Sime Darby Bhd embarked on a "pure play" exercise that involved the formation of stand-alone listed entities in the plantation, property, trading, and logistics sectors.
Sime Darby Plantation said in a Bursa Malaysia filing on Thursday (Dec 1) that it signed an agreement to sell the Kapar land to Sime Darby Property's wholly owned subsidiary, Sime Darby Property (Bukit Tunku) Sdn Bhd.
It was stated that the land, which was acquired in 1975, is part of the Bukit Kerayong Estate and is used for agricultural purposes.
The proceeds from the sale will be used to meet Sime Darby Plantation's working capital needs, it added.
The original cost of the Kapar land investment was RM4.7 million, with an additional RM10.7 million spent on subsequent investments in bearer plants and immovable assets up to April 2013.
As of December 31, 2021, the net book value of the group's land was RM11.8 million, which included the allocated original cost of investment and capitalised costs.
The retailed party deal is expected to be completed in the second quarter of 2023, according to Sime Darby Plantation.
Kapar land will be developed into a sustainable integrated industrial township.
Sime Darby Property, for its part, stated that the land would be purchased entirely in cash, using a combination of internally generated funds and bank borrowings.
According to the property developer, the land is four kilometres from the Kapar interchange of the West Coast Expressway, and accessibility will be enhanced further by the proposed East Coast Rail Link development.
The acquisition, according to Sime Darby Property, is in line with the group's SHIFT25 strategy to transition from a pure play property developer to a real estate company by broadening and diversifying income streams.
Given the strategic location and large net land area, the company stated that the land would be developed into an integrated sustainable industrial township.
The acquisition is also consistent with the group's active land bank management, as it adds value to its existing matured townships in high-growth areas.
"The first phase of the proposed development is expected to be launched in 2024 and will be structured as a phased development over a period of 10 to 15 years.
"Based on the preliminary master layout plan, the estimated gross development value of the development is estimated to be between RM5 billion and RM6 billion," it added.
Sime Darby Plantation's share price closed 15 sen or 3.52% higher at RM4.41 on Thursday, valuing the company at RM30.5 billion, while Sime Darby Property's share price remained unchanged at 48.5 sen, valuing the company at RM3.3 billion.
© December 2022, EdgeProp.my