KUALA LUMPUR: WCT Holdings Bhd is acquiring the development rights for over 400 acres of land with a potential gross development value (GDV) of RM7bil in Sabah.
In a filing with Bursa Malaysia yesterday, the company said its indirect 80%-owned subsidiary, WCT Perkasa Sdn Bhd, had entered into a principal agreement with Yayasan Sabah (YS) for the acquisition of options to acquire development rights to the land.
Under the agreement, the developer will be granted options by YS to acquire the sole, exclusive and absolute development rights over the parcels of land measuring about 411.394 acres in Lok Kawi.
WCT said the land is intended for a proposed mixed-use development and will comprise commercial, retail, hotels and resorts, offices, residential properties and "such other development components as may be determined by the developer."
However, "the company is not privy to the financial statements of YS and hence does not know the net book value of the land," it said.
Upon execution of the principal agreement, WCT said it will pay YS an earnest deposit of RM8.4mil, representing 1% of the minimum guaranteed sum of the land.
"The period opened for the developer to exercise the options is 15 years from the unconditional date of the principal agreement, or such extended period as may be mutually agreed between the parties."
WCT said it will exercise the option on at least two parcels of its choice.
It said the consideration for the optioned parcel shall be 12% of the actual GDV in relation to the development of the land.
"On the assumption that the developer exercises the options over all the parcels, the total consideration shall be 12% of the actual GDV of the project, subject to the minimum sum of RM840mil, which is RM46.87 per sq ft of the gross land area of the land.
"The land's minimum guaranteed sum has been computed based on the preliminary projected GDV for the project of about RM7bil."
WCT said the acquisition would enable the group to enhance its land bank, with strategic development opportunities in Sabah.
The deal will also allow WCT to make an acquisition without incurring a substantial upfront land cost, as the options to acquire the development rights over the land are to be exercised by the developer over the option period.
"The land is strategically located on the west coast of Sabah, about nine km from the Kota Kinabalu International Airport and 16km south of Kota Kinabalu.
"The growth prospects for Sabah remain bright with the state government's priority to further develop the state, in particular its economic activities, infrastructure construction, property market, attractive private investment opportunities and its role as a premier eco-tourism destination."
As the land mostly comprises foreshore and is covered by water, WCT said reclamation works will need to be undertaken before any development is able to be carried out.
As such, WCT said it will be exposed to risks associated with reclamation works.
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