Magna Prima Bhd will take possession of a parcel of prime land in Jalan Ampang on which Lai Meng Primary School is located by year-end (2013) and plans to start development in the second quarter of 2014, if things pan out.
The land, which is within a stone’s throw of the iconic Petronas Twin Towers, is viewed as the jewel in the company’s crown.
It has been almost four years since the company announced its proposal to acquire the 2.6 acres. The value of the land has appreciated to over RM300 million.
The developer announced in March 2009 that it had managed to seal an agreement with the Lai Meng Girls’ School Association (LMGSA) to acquire the land. The deal was conditional upon the transfer of a 5.5-acre parcel in Bukit Jalil to LMGSA to relocate the school, at no cost, on top of paying RM148.1 million cash to the association.
As for the Ampang land, the niche developer plans to build two 60-storey towers on it. One tower will consist of serviced apartments while the other will comprise a hotel and office lots.
The development, which will have a gross development value (GDV) of RM1.8 billion, will be Magna Prima’s largest by far. It will be its flagship project and will boost its earnings significantly.
While the project could provide the main impetus for earnings growth, there are concerns over whether the company has the financial muscle to take on a development of such magnitude. Its balance sheet as at Sept 30, 2012, showed a cash balance of RM4.73 million plus cash held under a housing development account of RM4.93 million. Bank borrowings amounted to RM97.7 million, some RM85 million of which was long term. This translates into a gearing of 0.66 times.
Magna Prima intends to undertake the development on its own and has put in place plans to raise the necessary funds. It will use internally generated funds and bank borrowings to finance the project. Also, it will definitely be selling one of the towers. A few potential buyers have already expressed their interest.
2013 will be a new milestone for Magna Prima Bhd as it moves over from million to billion ringgit developments.
It had acquired a rm60 million acquisition in Sunway Mentari PJ, and will focus on current (May 2013) projects development.
Magna Prime has several projects in the pipeline for 2013, including the launch of Phases 2 and 3 of Boulevard Business Park in Jalan Kuching, comprising serviced apartments and retail outlets.
The developer also plans to launch a commercial development in Petaling Jaya and a mixed-use development in Section 15, Shah Alam.
Magna Prima also has development in Melbourne, Australia.
The four year Magna Ecocity development in Shah Alam, with a GDV of rm1.4 billion will commence in the third quarter of 2013.
Focused on the Klang Valley, Magna Prima is a niche developer of integrated lifestyle themed projects that attract robust take up rates.
The company is also casting its eyes outside the Klang Valley in looking at other states like Penang.
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