KUALA LUMPUR (March 21): Property developer Yong Tai Bhd is buying two pieces of leasehold commercial land measuring 12 acres in all, located next to the Impression Melaka theatre, for a RM1.1 billion mixed development comprising a hotel, serviced apartments and retail units.

Yong Tai is buying the lands by acquiring the owner Laila Development Sdn Bhd, for RM35 million. It intends to fund the purchase via a mix of internal funds and bank borrowings.

In a statement today, Yong Tai said the project's gross development cost (GDC) is RM800 million (including the land cost), which gives rise to a potential development profit of RM300 million.

Yong Tai expects the mixed development to take approximately five years to complete. It is now in the initial stages of development planning and will be submitting a detailed development plan to the relevant authorities for approval.

Yong Tai group chief executive officer Datuk Wira Boo Kuang Loon is optimistic that the acquisition will further fuel the growth of the company.

"The Laila Development Lands are just next to the Impression Melaka theatre. We deem these acquisitions as strategic investments and expect it to contribute positively to the Group's future earnings in the years to come," he added.

The acquisition is expected to be completed by the third quarter of 2017.

Meanwhile, Yong Tai's wholly-owned subsidiary, YTB Impression Sdn Bhd, is also partnering JM Bestari Land Sdn Bhd to develop a piece of land in Melaka Tengah, Melaka, which JM Bestari is in the midst of buying from Chief Minister of Malacca (Inc).

YTB Impression has inked a joint development agreement with JM Bestari, said Yong Tai, under which JM Bestari has agreed to grant YTB Impression the sole and exclusive rights and entitlement to develop the joint venture (JV) land.

In return, YTB Impression will pay JM Bestari an amount equivalent to 21% of the gross development value (GDV) of the JV development, which is also expected to take five years to complete and may include commercial and retail units.

The proposed JV development is expected to have a total GDV and estimated GDC of approximately RM1.2 billion and RM800 million respectively, giving rise to potential gross development profit of RM400 million, said Yong Tai.

Boo said the above corporate exercises serve to complement Yong Tai's overall expansion plans. With an estimated GDV of approximately RM2.3 billion, he said the exercises will pave the way for the group to continue tapping into the property development industry in Malaysia.

The corporate exercises are expected to increase Yong Tai's development land banks in Impression City from 117 acres (inclusive of 17 acres of Impression Melaka theatre land) to 138 acres and provide near-medium and long-term source of revenue and profit and a development pipeline for a period of five years.