Jiankun in JV to develop RM180m GDV serviced apartment in Selangor

KUALA LUMPUR (July 9): Jiankun International Bhd is partnering with the landowner a parcel of 0.81 ha freehold land in Daerah Petaling, Selangor, to develop 377 units of serviced apartments with an estimated gross development value (GDV) of RM180 million.

In a filing yesterday with Bursa Malaysia, Jiankun said its wholly owned unit JKI Development Sdn Bhd has entered into a joint venture (JV) agreement with the landowner Five Star Development (Puchong) Sdn Bhd to develop the tract.

Under the agreement, Five Star agrees to grant JKI exclusive rights to develop and construct the proposed development in return for 20% of the GDV, estimated at RM36 million.

Jiankun said the development also comprises facilities, amenities and infrastructure for the serviced apartments.

The sole cost and expense of construction will be borne by JKI, which is estimated to be RM147.20 million, inclusive of Five Star’s entitlement, according to the filing.

Jiankun said the construction cost of the JV is expected to be funded via a combination of bank borrowings and proceeds from its rights issue on Dec 31, 2014.

Five Star will deliver vacant possession of the said land to JKI upon the execution of the JV agreement, free from all encumbrances, to enable JKI to start earthworks for the project.

“The JV will [enable] JKI and Jiankun to participate in high-rise property development as well as contribute positive revenue and earnings in future,” Jiankun said.

While the JV will not have any material effect on its net assets per share and gearing for the financial year ending Dec 31 (FY15), Jiankun said future earnings to be derived from the JV are expected to contribute positively to its net assets per share.

Jiankun closed 1.5 sen or 5.17% lower at 27.5 sen yesterday, for a market capitalisation of RM43.99 million.