PETALING JAYA: Guocoland (M) Bhd said its associate company Vintage Heights Sdn Bhd (VHSB) is disposing of a parcel of land in Sepang for RM474.99mil.

Upon completion of the disposal, VHSB is expected to realise a net gain on disposal of approximately RM290mil, said Guocoland, adding that approximately RM116mil is expected to be attributable to Guocoland.

In a filing with Bursa Malaysia yesterday, Guocoland said VHSB entered into a conditional sale and purchase agreement with Putrajaya Properties Sdn Bhd (PPSB) and Hap Seng Consolidated Bhd (HSCB) for the proposed disposal of the 73 million sq ft land.

“The proposed disposal will enable VHSB to realise its investment in the property,” said Guocoland, adding that the proceeds will be used for VHSB’s working capital purposes, repayment of borrowings and/or distribution to shareholders of VHSB.

“The net gain attributable to owners of the company represents an increase in earnings per share and net assets per share of the company of about 17.31 sen,” it said.

The company said it expected the proposed disposal to be completed in the second half of 2016.

Guocoland said the freehold parcel of land was currently being used as an oil palm plantation, whereby the oil palm trees planted on the property are aged about 23 to 36 years.

It added that the average yearly fruit bunches harvested from the property for the past three years was about 3,457.5 tonnes.

Hap Seng Consolidated is a shareholder of VHSB, which had on March 27, 1992 acquired the land from Hap Seng Consolidated. The cost of investment was RM50.48mil then.

The market value of the land has since increased to RM203.15mil based on valuation by CB Richard Ellis (M) Sdn Bhd as at Jan 31, 2013. The net book value of the land was RM84.16mil as at June 30, 2015.

Putrajaya Properties is wholly-owned by Putrajaya Holdings Sdn Bhd, the master developer of Putrajaya.

Guocoland, formerly known as Hong Leong Properties Bhd (HL Prop), was supposed to jointly develop some parts of Putrajaya with Putrajaya Holdings in 2003, but the deal fell through.

According to reports, HL Prop wanted its own design and layout for the precinct but Putrajaya Holdings was not agreeable as that would have delayed delivery of the project.

HL Prop was supposedly also concerned about the selling prices and the valuation, which was supposed to be carried out by a third party.

Based on reports, the first batch of houses built for government staff in the country’s new administrative capital, the profit margin shared between Putrajaya Holdings and its joint-venture (JV) partners was less than 5%, which was a far cry from the 20% to 30% expected.

It was understood that the JV partners were assured that margins would be better in future projects, but some were not too comfortable with that assurance.