This article first appeared in The Edge Malaysia Weekly on April 29, 2024 - May 5, 2024

What appears to be a common partnership between landowner and developer to develop a parcel of land has turned out to be a transaction where there is more than meets the eye.

Last week, Chin Hin Group Property Bhd announced that its unit Chin Hin Property (Segambut) Sdn Bhd had signed a development agreement with Kar Sin Bhd, the beneficial owner of a plot in Segambut, and New York Empire Sdn Bhd (NYESB), which is the registered proprietor of the tract.

Chin Hin is to build 2,434 serviced apartment units on the plot, which is estimated to cost about RM575 million. In return, Chin Hin will be entitled to a sum of RM633 million, plus 84.5% of the gross development value if it exceeds RM685 million.

Notably, Kar Sin is a wholly-owned unit of YNH Property Bhd. A twist to the deal is that Kar Sin signed an agreement to sell the parcel to Frazel Group Sdn Bhd in September last year. Roughly seven months later, it has revoked the land sale, and is now partnering with Chin Hin to develop the 6.49-acre plot.

Under the agreement, Kar Sin, as the beneficial owner, will get at least RM52 million from Chin Hin, which will pay the sum as a security deposit within three months after the agreement receives all the necessary approvals.

Of the sum, Chin Hin will pay RM24 million to Frazel Group on behalf of Kar Sin. Shareholders of Frazel Group are Datuk Keh Chuan Seng and Cheong Kai Meng, according to filings to the Companies Commission of Malaysia.

Besides, part of the sum received by Kar Sin will also go towards paying the redemption sum of a financing provided by RHB Bank, to whom the Segambut land is currently charged. The amount that YNH’s unit needs to pay RHB Bank is not known.

Questions that arise are: Why should Kar Sin pay Frazel RM24 million? How much is the sum that Kar Sin needs to settle with RHB? Kar Sin bought the Segambut land in September 2007, but why is it only the beneficial owner of the land?

While Chin Hin announced the deal to Bursa Malaysia, YNH did not.

And a question to the regulator: Does YNH have the obligation to make announcements on the land deal with Frazel and later with Chin Hin?

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