IOI Properties: Phase 2 of IOI City Mall to receive RM500 mil investment

IOI Properties' chief executive officer Lee Yeow Seng said today that the design and planning of Phase 2 of the shopping mall is currently on-going.

"Construction is expected to take about 2 to 3 years," he said, after the company's extraordinary general meeting (EGM) today.

"We will be adding about one million square feet to Phase 1 shopping mall," he added.

IOI Properties' EGM sought the approval of minority shareholders on the injection of Shin Cheng's private land into the property arm of IOI Group .

IOI Properties' executive chairman Tan Sri Lee Shin Cheng, who was also present, said 99.99% of the shareholders approved the motion, paving the way for Phase 2 of the IOI City Mall to begin.

He said Phase 1 of the shopping mall has achieved an occupancy rate of 93%.

"Thirty years ago, this place was in the middle of nowhere," he said.

"Nobody would have thought this area would have a shopping mall.

"Now that the mall and other properties are here, this area will grow faster," he added.

To recap, IOI Properties had announced in October last year that it is injecting two property companies, of which Shin Cheng, his wife Puan Sri Hoong May Kuan and elder son Datuk Lee Yeow Chor are major shareholders, in the property arm of IOI Group for RM1.583 billion in cash and shares.

The acquisition will see Lee’s indirect stake increase to 58.56%, from 51.47% currently.

The 400 acres of land owned by the two companies — Mayang Development Sdn Bhd (MDSB) and Nusa Properties Sdn Bhd (Nusa) — is expected to generate an indicative gross development value (GDV) of about RM20 billion.

The deal is funded 74% by shares priced at RM2.21, with the cash portion of the deal estimated to amount to RM158 million.

In a circular to minority shareholders in December, Kenanga Investment Bank said the issuance of IOI Properties shares would increase the paid-up capital of the company to RM4.41 billion, from RM3.76 billion.

The proposed acquisition will result in an increase in IOI Properties net assets to RM14.848 billion, from RM13.427 billion as at June 30, 2015; but the group’s net assets per share will decrease slightly to RM3.37, from RM3.56, as the issue price is below its net asset per share.

IOI Properties had said that the acquisition would enable the company to expand its land bank. The land is situated within IOI Resort City, fronting the entrance of Putrajaya, and next to the South Klang Valley Expressway.

Once completed, the land bank of IOI Properties in IOI Resort City will be enlarged to 161.87ha, from its existing 20.23ha.