Yong Tai plans two new Melaka developments

PETALING JAYA (March 21): Property developer Yong Tai Bhd is planning two new developments with an estimated gross development value (GDV) of RM2.3 billion in Melaka, to complement its Impression City master development.

It said yesterday it is buying two pieces of leasehold commercial land measuring 12 acres (4.9ha) in all, next to the Impression Melaka theatre, for a RM1.1 billion mixed development comprising a hotel, serviced apartments and retail units.

In a press statement today, Yong Tai announced that it has entered into a Conditional Sales and Purchase Agreement (SPA) with Mustazah Osman and Laila Endut (the vendors) of Laila Development Sdn Bhd for the acquisition of their entire block of issued shares in Laila Development for RM35 million cash.

Laila Development is the registered and beneficial owner of the two vacant leasehold plots of six acres each.

According to Yong Tai, the parcels of land are intended for a mixed development project which will comprise a hotel, serviced apartments and retail units.

The developer will be submitting a detailed development plan to the relevant authorities for approval, once the plan is firmed up.

The proposed development will have an estimated gross development value and gross development cost of about RM1.1 billion and RM0.8 billion respectively.

Yong Tai group CEO Datuk Wira Boo Kuang Loon is optimistic that the acquisitions will further drive the company’s growth and expansion in the near future.

“The lands are just next to the Impression Melaka theatre. We deem these acquisitions as strategic investments and expect them to contribute positively to the group’s future earnings in the years to come,” he said, adding that the corporate exercise is set to be completed by 3Q2017.

The theatre is part of the group’s Impression City, a RM5.4 billion gross development value cultural tourism development in Melaka which also features hotels, a mall, residential units and commercial lots. The landmark project will be developed in stages on a 100-acre parcel of land.

Meanwhile, Yong Tai’s wholly-owned subsidiary YTB Impression Sdn Bhd has entered into a conditional joint development agreement (JDA) with JM Bestari Land Sdn Bhd for the development of all land under PT 2326, Kawasan Bandar VI, District of Melaka Tengah.

JM Bestari Land entered into the SPA with the Chief Minister of Malacca (Incorporation) to purchase the JV Land but the process has yet to be completed.

Pursuant to the JDA, JM Bestari Land, which will be the landowner of the JV Land, has agreed to grant YTB Impression the sole and exclusive rights and entitlement to develop the JV Land, subject to the terms and conditions of the JDA.

In return, YTB Impression will pay JM Bestari Land an amount equivalent to 21% of the GDV of the joint-venture (JV) development. Subject to the relevant authorities' approval, the proposed JV development of the JV Land will take about five years and may include commercial and retail units.

The proposed JV development is expected to have a total GDV and GDC of RM1.2 billion and RM0.8 billion (including JM Bestari Land’s entitlement) respectively, giving rise to a potential gross profit of RM0.4 billion.

With an estimated GDV of about RM2.3 billion, Boo said the corporate exercises serve to complement Yong Tai’s overall expansion plans where it will pave the way for the developer to continue tapping into the property development industry in Malaysia.

The corporate exercises are expected to increase Yong Tai’s development landbank in Impression City from 117 acres – inclusive of 17-acre Impression Melaka theatre land – to 138 acres and provide near medium and long-term source of revenue and profit.

The development plan and JV development will also provide Yong Tai with a development pipeline for a period of five years.

Yong Tai added that the Impression Melaka theatre is expected to be a catalysts for the growth and future development of the surrounding areas, once it commences operations. The theatre is envisaged to have a built-up area of about 233,100 sq ft with a seating capacity of 2,000 viewers.