By THE STAR
PETALING JAYA: YNH Property Bhd’s share price has fallen 50 sen over the past three days on reports that a proposed joint-venture agreement with Singapore’s CapitaLand Ltd has lapsed, which was confirmed by the latter yesterday.
However, YNH is confident the development of Menara YNH in Jalan Sultan Ismail, Kuala Lumpur, will proceed as scheduled despite the exit of CapitaLand.
According to YNH chief financial officer Y.M. Chan, the company will launch the project this year and expects it to be completed in 2011.
The approvals from the authorities are expected in the next two to three months.
Last December, YNH’s wholly-owned unit Kar Sin Bhd entered into a memorandum of understanding (MoU) with CapitaLand Commercial and Integrated Development Ltd to jointly develop the commercial project beside the Shangri-La Hotel.
YNH was to have a 60% stake in the joint venture.
In a joint statement on the deal, the two companies had said further details would follow approval from the authorities.
But, in a statement yesterday, CapitaLand said the joint development with YNH had been called off. It said the MoU to build an office tower in the Golden Triangle of Kuala Lumpur “has lapsed due to non-fulfilment of the conditions precedent”.
In an announcement to Bursa Malaysia, YNH said the deal was off and it would develop the project on its own.
It is understood the dispute was over the value of the 133,000-sq-ft land of the project.
According to Chan, a few other potential partners had shown interest in the project and that the company would consider their proposals.
“Based on our strong cash position, and with the support of financial institutions, we may decide to undertake the project on our own,” he said.
He said a number of global real estate and private equity funds had shown interest in buying the building en bloc.
“Going by the strong interest and the high expected yield of 7% per annum, we have raised the price of the building to RM1.5bil from RM1bil,” Chan said.
The office tower with a net lettable space of 1.1 million sq ft – of which 10% is retail space – will cost RM500mil and provide an expected gross margin of 38% to YNH.
To ensure top quality and premium value, Chan said a reputable contractor, preferably from Japan, would be engaged to work alongside YNH’s in-house construction arm to undertake the project.
YNH shares ended yesterday 15 sen lower at RM2.80.