E&O-KWAP JV cemented

Rendering of STP2A concept masterplan.

KUALA LUMPUR: Eastern & Oriental Berhad (E&O) shareholders have approved the disposal of a portion of development land at the Seri Tanjung Pinang Phase 2 (STP2) project, by the Group’s subsidiary Tanjung Pinang Development Sdn Bhd (TPD) to Kumpulan Wang Persaraan (Diperbadankan) (KWAP).

The approval was obtained at an extraordinary general meeting (EGM) today and covers the sale of 20% of net development land measuring 1.445 million square feet (sq ft) on Phase 2A of STP2 (STP2A) for a cash consideration of RM766,022,310.42.

STP2A is the first phase of the 760-acre STP2 reclamation project on the northeast coast of Penang island, for which TPD has been granted the concession rights to reclaim and develop. STP2A has a total gross area of approximately 250 acres.

E&O managing director Kok Tuck Cheong said the go-ahead from E&O shareholders “is an important milestone towards realising the TPD partnership with KWAP to develop STP2A”.

A special purpose vehicle (SPV), Persada Mentari Sdn Bhd (PMSB), has been formed for this reason and will be owned by TPD and KWAP on an 80% and 20% basis, respectively.

The Group will use the proceeds from the land disposal to meet the funding requirements for STP2A reclamation and infrastructure works.

Kok added, “The shareholders’ vote of approval reinforces the management’s direction and belief that STP2A will be a major earnings driver for E&O over the next decade. The sale of the land will enable the Group to unlock the value of our investment in STP2A, realise capital appreciation of the land and partially monetise our investment in STP2A. Importantly, this allows the Group to further reinvest into the development of STP2A.”

Meanwhile, reclamation works for STP2A continue to gain momentum since commencing in early 2016. Pursuant to the terms of the reclamation contract, these works are due to be completed within the second half of 2018 barring any unforeseen circumstances.

“We are targeting a first launch at STP2A in 2019, marking a significant new chapter in the E&O Group’s vision of creating an exemplar integrated masterplanned development - one that takes pride in what has been achieved in Seri Tanjung Pinang Phase 1, that serves as a ready benchmark for innovation and standards to be elevated at STP2” said Kok.

As the award-winning 240-acre first phase of STP (STP1) approaches maturity after 12 years since its maiden property launch, the Group is aligning its resources and focus on the reclamation and development of STP2.

Starting from the first launch of Ariza courtyard terraced homes in 2005, E&O has built more than 3,000 homes at STP1 with a gross development value in excess of RM5.0 billion.

STP1 is already the largest seafront development in Penang island, a highly coveted residential address that is a thriving community for Penangites as well as expatriate families of 20 nationalities. The total area of STP1 and STP2 combined will form 1,000 acres, making it the single largest seafront development in the prime northeast district of Penang island. Its exceptional seafront location enjoys easy access to the UNESCO World Heritage Site of George Town, and the famed heritage Eastern & Oriental Hotel from which the E&O Group proudly takes its name.