S P Setia to buy rest of Setia Federal Hill for RM431.89m

KUALA LUMPUR (March 9): S P Setia Bhd yesterday entered into a sale and purchase agreement with Mekar Gemilang Sdn Bhd to acquire the remaining 50% stake in Setia Federal Hill for RM431.89 million cash.

Setia Federal Hill’s core asset is the two parcels of leasehold land near Bangsar, Kuala Lumpur, totalling about 51.57 acres (20.87ha).

“The purchase consideration is at a premium of 10.9% to the unaudited adjusted net asset value of Setia Federal Hill as at Dec 31, 2017 of RM778.64 million after taking into consideration the market value of land of RM2.35 billion or RM1,050 per sq ft, the potential estimated gross development value of up to approximately RM20.19 billion based on preliminary management estimates, and the prime location of the parcel,” said the property developer in a filing with Bursa Malaysia yesterday evening.

S P Setia said the purchase consideration is expected to be funded through cash proceeds from the issuance of Islamic redeemable convertible preference shares (RCPS-i A) by S P Setia, which was completed on Dec 6, 2016, and/or bank borrowings.

Setia Federal Hill is a joint-venture (JV) company which was established to undertake a development project on the land, held equally by S P Setia and Mekar Gemilang.

Presently, Mekar Gemilang owns 50% equity interest and S P Setia owns the remaining 50% in Setia Federal Hill. Kota Cahayamas Sdn Bhd is the sole owner of Mekar Gemilang, which is said to be linked to tycoon Tan Sri Syed Mokhtar al-Bukhary.

The land was obtained through a privatisation agreement in 2012 involving a swap of the parcel with the government in exchange for: i) the planning and development of a health research facility complex known as “Kompleks Institut Penyelidikan Kesihatan Bersepadu” in Setia Alam; ii) the transfer of a piece of freehold land in Setia Alam of approximately 41.5 acres for the “Kompleks Institut Penyelidikan Kesihatan Bersepadu”; and iii) construction of a clinic to be known as Klinik Bangsar and 24 apartments on the land.

Upon completion of the proposed acquisition, Setia Federal Hill would become a wholly-owned subsidiary of S P Setia.

S P Setia is of the view that the location of the land in Bangsar and close proximity to Kuala Lumpur Sentral provide it with readily available amenities, facilities, and infrastructure around the land will add value to the properties on the land.

“The proposed acquisition is expected to support and strengthen the strategic development objectives and value enhancement of the group,” it said.

The proposed acquisition would require the approval from Unit Kerjasama Awam Swasta and if required, the Economic Planning Unit, to effect a change in the shareholding and equity structure of Setia Federal Hill.

This article first appeared in The Edge Financial Daily, on March 9, 2018.

For more stories, download EdgeProp.my pullout here for free.