The name of one of Malaysia’s emerging property tycoons has cropped up again, this time in relation to the purchase of land and buildings in Pusat Bandar Damansara.

According to property market officials, Malton Bhd’s executive chairman Datuk Desmond Lim Siew Choon had firmed up a deal to buy the prime land from Johor government-owned Johor Corp (JCorp) for about RM700 million, comprising cash of RM500 million and office space worth about RM200 million in the redeveloped area.

Malton was not involved in the deal which Lim clinched privately with foreign partners.

However, it is now said that some top officials in JCorp have been told to look into the possibility of rescinding the deal on the grounds that it was taking a long time to complete. When contacted, a spokesman for JCorp says the company is not aware of any new developments in the deal.

It is understood that RM500 million cash has already been paid and that Lim is once again partnering the Qatar Investment Authority (QIA) in the venture. QIA was Lim’s partner in the development of Pavilion Kuala Lumpur.

It was rumoured that Lim had originally joined forces with the Naza family on the Pusat Bandar Damansara deal, but the family decided against going ahead with it. An indication of the Naza family’s involvement is in JCorp’s annual report for 2009, which touched on the sale of the land.

According to the annual report, JCorp’s commercial property arm Damansara Assets Sdn Bhd had entered into a joint-venture agreement (JVA) with its subsidiary Bukit Damansara Development Sdn Bhd and Impian Ekspresi Sdn Bhd for the latter to acquire and develop the Pusat Bandar Damansara complex along with an adjacent piece of land.

Under the JVA, Damansara Assets will receive RM500 million cash and 500,000 sq ft of space in the office buildings to be constructed in the proposed redevelopment, or office space with a market value of RM200 million if only the redevelopment of Pusat Bandar Damansara takes place, giving the deal a value of RM700 million.

As is the case with low-profile businessmen, Lim’s name does not appear anywhere in the deal. But a search with the Companies Commission of Malaysia reveals that Impian Ekspresi, a dormant company with a paid-up capital of RM3, counts two of the Naza brothers — Sheikh Mohd Nasarudin and Sheikh Mohd Faliq — among its directors.

As at March 31, 2009, Impian Ekspresi had current assets of RM1,933 and current liabilities of RM16,022 while its loss after tax for the period was RM1,535.

However, when contacted by The Edge, an official who spoke on behalf of Naza Group denied any involvement of the siblings in the deal. “Contrary to market speculation, they [the Naza brothers] are not involved in the matter,” she said.

As for Lim, sources say two years ago, shortly after Lim made a 10% downpayment on the asset, he wanted to pull out because market conditions were bad.

“But in recent months, he has topped up the sum to RM500 million. However, top officials in the Johor government are said to have told JCorp to look at the deal again,” says a source.

It is said Lim plans to redevelop the area which houses several government departments now into a second Pavilion Kuala Lumpur, complete with a mass rapid transit (MRT) station.

Preliminary information on the Greater Kuala Lumpur masterplan as part of the Economic Transformation Programme shows that the area will see the proposed 40km MRT Circle Line with 28 stations serving the immediate vicinity.

Some of the proposed stops will include Mid Valley Megamall, Sri Hartamas, Mont’Kiara, Great Eastern Mall, Plaza Damansara, Bangsar Shopping Centre and Pusat Bandar Damansara. However, a realignment of the system that would exclude the areas of Plaza Damansara and Pusat Bandar Damansara to avoid “sensitive high-value property areas” has not been ruled out, according to sources.

A source tells The Edge that Pusat Bandar Damansara, which is surrounded by the high-end enclave of Bangsar and Bukit Damansara, has been given a plot ratio of eight times in the amendments to the KL masterplan.

Other landowners in the area include Selangor Properties Bhd and tycoon Tan Sri Quek Leng Chan’s GuocoLand (M) Bhd. Selangor Properties’ education arm is HELP University College, which is housed in Pusat Bandar Damansara. According to the company’s annual report for 2009, it also owns 10.3 acres in Jalan Semantan, Damansara Heights.

Pusat Bandar Damansara, or the Damansara Town Centre, was built in the early 1980s and sits on prime freehold land, surrounded by the SPRINT highway. It is learnt that the rental rates for the nine seven-storey blocks here are up to RM3.50 psf. The centre is well known because it houses an office of the Immigration Department of Malaysia.

Talk that the area will be redeveloped is not new. In the past, Sime Darby Property was said to have been interested in the regeneration of the area, which would have seen the demolition of some of the structures and a realignment of the road systems to improve traffic flow.

Although Lim’s name has surfaced in the Pusat Bandar Damansara redevelopment, it is unlikely that Malton will be directly involved in it, given that no announcement has been made to Bursa Malaysia. Lim is the property company’s major shareholder.

In the past, Lim’s name has been linked with some high-profile projects but Malton was not involved. In fact, Malton is a laggard among property players and only attracted the attention of investors recently on the back of renewed interest in property players.

It is known that JCorp has debt amounting to RM3.6 billion due in July 2012. Hence, it has been looking to dispose of some assets. However, its officials have maintained that JCorp has over RM12 billion worth of assets, including RM6 billion in quoted securities which are sufficient to clear the debt.

It was recently reported that CIMB Investment Bank Bhd has been appointed to conduct a group-wide restructuring exercise. It is not known as yet what the exercise will entail, although it is said the disposal of JCorp’s prized asset KFC Holdings Bhd is out of the question.

JCorp recently rejected two bids, one by tycoon Tan Sri Halim Saad and the other by international private equity firm Carlyle Group, for its subsidiary QSR Brands Bhd, which is 58%-owned by Kulim Bhd.

The conglomerate, which counts over 200 companies in its stable, including five listed companies and a real estate investment trust, is also suffering from a perceived loss of direction after its longtime head Tan Sri Muhammad Ali Hashim left the group suddenly in August this year.

It is not clear if JCorp will be able to review the sale of its Pusat Bandar Damansara assets, but industry observers are probably wondering what brought things to this point. Does the new management of JCorp suddenly see bigger potential in the area and is therefore scuttling the deal?

This article appeared in Corporate page of The Edge Malaysia, Issue 836, Dec 13-19, 2010