DRB-Hicom Bhd, a diversified group, plans to swap its large portion of non-industrial property assets and its entire hospitality portfolio for industrial land in Tebrau, Johor, in a deal worth RM1.93 billion.
The group, with its controlling shareholder Tan Sri Syed Mokhtar al-Bukhary said in a statement on March 8 that the disposal was part of an exercise to set a new direction for its property business.
According to The Star, the plan to sell its non-industrial land assets and exit the hospitality industry, and acquire a sizeable industrial land in Johor is a move to take advantage of its experience in the development industrial properties.
Under the initiative, the group would sell several subsidiaries, owning some 2,268.43 acres of land, as well as its entire equity in Horsedale Development Bhd and Rebak Island Marina Bhd to Prisma Dimensi Sdn Bhd (PDSB) for RM1.93 billion.
Subject to regulatory and governmental approvals, the sale of the companies and the land assets would net DRB-Hicom a one-time gain of about RM849 million.
It said the transaction is expected to be completed within the first quarter of 2019.
DRB-Hicom group managing director Datuk Seri Syed Faisal Albar said the transaction would indicate a shift in focus for its property sector to leverage the group’s experience in industrial property development.
“There is a 30-year experience as an industrial property developer that DRB-Hicom has in its history, and this transaction affords us the opportunity to leverage on this capability.
“With the incoming land bank in Johor, the group is in an advantageous position to tap into the high demand of industrial parks especially from Singapore.
“DRB-Hicom intends to develop this into a high-tech and modern industrial park once the property market recovers from its current slumber,” Syed Faisal said in a statement.
DRB-Hicom noted that its proposed deal with PDSB would see the company exiting the hospitality industry, with the sale of Rebak Island Marina, the owners of Vivanta by Taj on Rebak Island, Langkawi, as well as the Holiday Inn Glenmarie Kuala Lumpur and Glenmarie Golf & Country Club in Shah Alam, Selangor.
Importantly, the deal is expected to expand DRB-Hicom’s industrial land bank to some 1,800 acres.
DRB-Hicom’s existing industrial land bank is located in Kedah, Perak and Melaka, totalling approximately 600 acres. Part of its land bank in Perak and Melaka is currently being developed as industrial parks, including the recently launched National Automotive Cluster@Proton City in Tanjung Malim, Perak.
Among the significant industrial areas developed by DRB-Hicom are Hicom Industrial Estate and Glenmarie Industrial Park in Shah Alam, Selangor, and Hicom Pegoh Industrial Park in Alor Gajah, Melaka.