THE past 10 years have been nothing short of eventful for the property industry, which started with a consolidation phase. Kicking off the mergers and acquisitions (M&A) in 2010 was government-linked UEM Land Holdings Bhd, which launched a RM1.4 billion takeover of privately-held property developer Sunrise Bhd, known for developing Mont’Kiara.

The deal entailed UEM Land entering into a corporate union with Sunrise through a share-swap deal at RM2.80 per share or a total of RM1.39 billion.

The merger created the country’s largest property developer with a market capitalisation of nearly RM10 billion and a 12,000-acre land bank. However, due to a slowdown in the property market, the market value of UEM Sunrise Bhd, in which Khazanah Nasional Bhd owns a 66.06% stake, has since shrunk to RM3.31 billion, with the stock down 52% over the past five years to close at 73 sen on Dec 23.

The following year saw Sime Darby Bhd acquire a 30% stake in Eastern & Oriental Bhd (E&O) for RM2.30 per share or RM766 million — a 59% premium to the market price at the point of the announcement — from its major shareholders, namely E&O managing director Datuk Terry Tham Ka Hon, GK Goh Holdings and Tan Sri Wan Azmi Wan Hamzah.

The bid, however, became an issue as minority shareholders of E&O questioned why Sime Darby did not extend a mandatory general offer (MGO) to buy out the rest of E&O’s shares. After investigating the matter, the Securities Commission Malaysia ruled that the plantations-based conglomerate’s acquisition of the stake in E&O did not trigger a mandatory offer obligation.

Sime Darby courted controversy again in June 2016 after it announced that it was disposing of a 10% stake in E&O to Paramount Spring Sdn Bhd — a private company owned by Tham — for RM342.2 million or RM2.60 per stock unit and 30 sen for each convertible warrant. The disposal price represented a 63% premium to E&O’s share price then and a 62% premium to its convertible warrant price.

Three months later, Sime Darby revised the sale price of the stake to RM323.3 million or RM2.45 per stock unit and 30 sen for each convertible warrant, noting that it was done “to better reflect the current outlook of the property sector”. E&O shares have fallen 44.7% over the past year to close at 63 sen on Dec 23, giving the company a market value of RM895.34 million.

In 2011, Permodalan Nasional Bhd (PNB) launched an MGO to acquire all the shares of S P Setia Bhd, the country’s second largest property firm by market capitalisation, at RM3.90 per share and 91 sen for each warrant. At the time, PNB had a 33.17% stake in the property developer, while its then president and CEO Tan Sri Liew Kee Sin owned 11.26% of S P Setia.

Following the offer, PNB had assured investors that Liew and the existing management team would continue to manage S P Setia. In mid-2012, Liew led a consortium comprising S P Setia, Sime Darby Property and the Employees Provident Fund (EPF) to make a bid for the famous Battersea Power Station in London for £400 million. Under the joint venture, S P Setia has a 40% stake, Sime Darby Property has 40% and the EPF, 20%.

In January 2014, S P Setia announced the resignation of Liew — less than two months after the company achieved record sales of RM8.24 billion in 2013.

However, Liew’s departure from S P Setia was by no means his exit from the property sector. He went on to set up Eco World Development Group Bhd, which went public in 2013, through a reverse takeover of Johor-based developer Focal Aims Holdings Bhd.

In April 2017, EcoWorld’s 27%-owned associate and international arm, Eco World International Bhd, made its debut on Bursa Malaysia.

The past decade also saw S P Setia buying sister company I&P Group Sdn Bhd for RM3.65 billion cash. I&P was itself formed following the rationalisation exercise of three property companies under the PNB umbrella — Island & Peninsular Bhd, Petaling Garden Bhd and Pelangi Bhd — in 2008.

In 2017, Sime Darby rolled out its demerger exercise plans, which divided the group into three entities — Sime Darby Plantation Bhd, Sime Darby Property Bhd and Sime Darby Bhd.

Megastructures of the 2010s

The 1990s saw the Petronas Twin Towers and KL Tower transforming Kuala Lumpur’s skyline. It was the Exchange 106 for the 2010s.

In October, the skyscraper overtook the Petronas Twin Towers as the country’s tallest building at 452m, but it also marks a dark moment in the country’s history.

Exchange 106 is located in the Tun Razak Exchange (TRX), a new financial hub that was to be the flagship development of 1Malaysia Development Bhd (1MDB). However, it was found that most of the funds raised by the state fund for TRX, as well as the 486-acre Bandar Malaysia project at the former Sungai Besi airport site in KL, had instead gone to PetroSaudi International Ltd, an Abu Dhabi-based company.

Between 2010 and 2015, 1MDB acquired five property assets, namely the TRX and Bandar Malaysia, as well as land in Air Itam in Penang, Alor Gajah in Melaka and Pulau Indah in Selangor.

According to reports, 1MDB Real Estate Sdn Bhd, now known as TRX City Sdn Bhd, later sold major plots of land in TRX to pay for infrastructure development in the project, but continued to face cash flow problems because proceeds amounting to RM1.095 billion from the land sale went to parent 1MDB.

Meanwhile, no money from the US$3 billion debt issue was used for TRX’s development.

At Bandar Malaysia, RM288 million from a government allocation for the project was diverted to pay the interest on loans taken by 1MDB.

In May 2017, TRX City announced that the Bandar Malaysia development agreement with the consortium of Iskandar Waterfront Holdings Sdn Bhd (IWH) and China Railway Engineering Corp (M) Sdn Bhd (CREC) had lapsed. This resulted in the aborted merger between Iskandar Waterfront City Bhd (IWCity) and IWH — both vehicles of tycoon Tan Sri Lim Kang Hoo — disappointing investors who had been anticipating the deal.

Sultan of Johor Sultan Ibrahim Sultan Iskandar and Kumpulan Prasarana Rakyat Johor Sdn Bhd (KPRJ) — both closely linked with Lim’s major projects — had also decided to withdraw from injecting land into the proposed IWCity-IWH merger, further damaging its prospects.

On Oct 31, 2017, Lim announced a new corporate exercise, this time involving Ekovest Bhd — where he is the major shareholder and executive chairman — undertaking a voluntary takeover offer for all shares in IWCity via a share swap or cash of RM1.50 apiece, excluding shares held by controlling shareholder IWH. However, the plan fell through as Ekovest failed to get the nod from shareholders for the takeover.

In April this year, the federal government decided to reinstate the RM140 billion Bandar Malaysia project in Kuala Lumpur, with a revised development plan from the initial project, which was abruptly terminated in May 2017. Under the new deal signed this month, the joint venture (JV) between IWH and China Railway Engineering Corp (M) Sdn Bhd (CREC) will own a 60% stake in the project, and the Ministry of Finance the remaining 40%.

During the decade, notable projects included the RM450 billion Forest City development in Johor that caused a stir in the local market with its massive launch in 2013.

The project, comprising four man-made islands spanning 30 sq km, was developed by Country Garden Pacificview Sdn Bhd, a 60:40 JV between China’s Country Garden Holding Co Ltd and Esplanade 88 Danga Bay Sdn Bhd, an associate of KPRJ. Malaysia set a new benchmark in terms of standards as the development came into being in just four years.

As we move into the next decade, the Bandar Malaysia development and rumours of a proposed merger between UEM Sunrise and EcoWorld will continue to pique the interest of investors. Exchange 106, meanwhile, will be trumped by the 644m PNB 118 skyscraper when it is ready in 2021.