Hong Lai Huat wholly-owned subsidiary HLH Development (HLHD) has agreed to co-develop an 11.5-hectare (ha) site in Sihanoukville, Cambodia with the site’s land owner Smart Winner, announced the group in a bourse filing on Monday (Nov 1).
This marks the group’s fourth mixed-use development project in Cambodia as well as its second foray into Sihanoukville after Project D’Seaview, its first mixed-use development in the same province.
About 3 to 5 ha of the site will be developed into a wholesale and distribution centre that includes a seafood market, which Hong Lai Huat intends to either lease or sell to a potential operator.
The remaining land will be subdivided into smaller plots for mixed-use development.
Under the terms of the joint venture (JV), Smart Winner will contribute the site, which is valued at US$25.2 million and located close to Sihanoukville Autonomous Port. It will hold a 50.4 per cent stake in the JV company.
HLHD will pay US$10 million for the remaining 49.6 per cent stake in the JV company, and contribute US$5 million towards its working capital.
It also has the right of first refusal to purchase an additional 19.54 per cent stake in the JV for US$6.5 million within the next 12 months. The group said this will allow HLHD to enjoy potential upside from any significant increase in the land value, once Phase 1 of the wholesale and distribution centre project has been marketed.
Development of the project is expected to commence in Q2 FY2022.
Ong Jia Jing, group executive director of Hong Lai Huat, said the latest Cambodia JV investment is expected to drive further upside for the group in the near future.
“Not only do we gain a recurring source of rental income from the development, we are also likely to benefit from the development of mixed-use project or potential sale of the remaining strata title plots,” said Ong.
Shares of Hong Lai Huat were trading S$0.001 or 1 per cent higher at S$0.10 as at 9.08 am on Monday (Nov 1).