According to its Bursa filing, the transaction is treated as a related party transaction as Victoria Land, which is also a wholly owned subsidiary of Akal Megah Sdn Bhd, is wholly owned by Lei Shing Hong Ltd.
It stated that the consideration is reached on a “willing-buyer, willing-seller” basis after taking into consideration the valuation of RM205.25 million arrived by third party property valuers.
Hap Seng elaborated that the rationale behind the acquisition is due to the strategic investment opportunity for a servicing centre supporting the offshore oil and gas industry in the region.
It revealed that the current average gross yield from the rental income from the lands (100% leased) and the building (65% leased) is 5.1% per annum and that the long-term nature of the industrial property lease also provides yield stability over a longer period.
The land’s lessee, ASB is a fully integrated supply base wholly owned by Sabah state government.
The group stated that the acquisition will be funded by internally generated funds and will increase its gearing from 0.48 times to 0.50 times based on its FY2019 financial statements.
It pointed out that the transaction is subject to the approval of the state authority for the transfer of the land and it is not subject to the approval of Hap Seng’s shareholders.