E&O, Mitsui Fudosan to develop RM348m project in Damansara Heights

The partnership is the 3rd JV between the local property developer and one of Japan’s largest property players

By NUR HAZIQAH A MALEK / Pic By www.easternandoriental.com

SHARES of Eastern & Oriental Bhd (E&O) fell 1.6% on Tuesday, after the property developer said it’s partnering Japan-based Mitsui Fudosan Co Ltd to develop three-storey villas/condominiums in Damansara Heights with a gross development value of RM348 million.

The stock closed at 63 sen, giving the group a market capitalisation of RM895.34 million. Markets were closed yesterday for New Year’s public holiday.

In a filing to Bursa Malaysia on Tuesday, E&O said KCB Holdings Sdn Bhd (KCBH) and Mitsui Fudosan (Asia) Malaysia Sdn Bhd (MFAM), both indirect wholly owned units of E&O and Mitsui Fudosan respectively, signed a joint-venture (JV) agreement on Dec 31, 2019.

KCBH will incorporate the JV company within 10 business days after signing the agreement, with KCBH to hold a 51% stake in the company and MFAM to own the remaining 49%.

Following the incorporation of the JV, the company will acquire 14 plots of freehold land spanning 15,962.2 sq m along Jalan Teruntung, Damansara Heights for RM88.33 million from Ambangan Puri Sdn Bhd, a fully-held indirect subsidiary of E&O.

“The objectives of the new JV shall be to carry on the business of developing, constructing and selling strata-titled three-storey villas or condominiums to be constructed on the project land.

“Both shareholders are also committed to advance a total of RM99.33 million in the 51:49 equity proportions to the new JV company to fund the purchase consideration of the project land and for working capital purposes,” it said.

KCBH will fund its share subscription in the JV company through internally generated funds, while the committed advances will be funded through intra-E&O group loans and advances between KCBH and Ambangan Puri, and internally generated funds.

Within five days of its incorporation, the JV firm will sign a sale and purchase agreement with Ambangan Puri to purchase the land and related project documents. Comprising 54 units, the proposed development is expected to be launched in the third quarter of 2020 and is slated for completion in four years.

It will generate cashflow for E&O and contribute positively to group earnings from 2021 onwards, the developer added.

The partnership is the third JV between E&O and Mitsui Fudosan, one of Japan’s largest property players.

“It is expected to continue to create greater awareness of E&O’s profile in the Japanese property market, thereby attracting Japanese purchasers for the project and other projects undertaken by E&O,” the group said.

The two parties signed an agreement in 2013 to develop The Mews — luxury serviced apartments — in Jalan Yap Kwan Seng, Kuala Lumpur (KL), followed by another signing in 2015 for serviced apartments in Jalan Conlay, KL.

Mitsui Fudosan also broke ground in 2017 on the Mitsui Shopping Park LaLaport KL, expected to be one of South-East Asia’s largest retail spaces. The five-storey mall, currently being constructed on the site of Pudu Prison in KL, has an estimated cost of RM1.6 billion and is a 50:50 joint development between MFAM and BBCC Development Sdn Bhd, a unit of the Employees Provident Fund, UDA Holdings Bhd and Eco World Development Group Bhd.