Hong Lai Huat Group has entered into a joint venture agreement with Smart Winner Co. for a mixed-use development project in Cambodia on Nov 1.
Under the agreement, Hong La Huat will pay US$10 million ($13.5 million) for a 49.6% stake in the joint venture company. Smart Winner Co., which owns the 11.5-hectare site for the proposed development, will hold the remaining 50.4% stake.
Hong Lai Huat will also contribute US$5 million towards the working capital of the joint venture company. In addition, it has the right of first refusal to purchase an additional 19.54% stake in the JV company for US$6.5 million within the next 12 months.
The site is located in the Sihanoukville Province of Cambodia, marking Hong Lai Huat’s second foray in the province following mixed-use development Project D’Seaview.
Based on preliminary studies, approximately three to five hectares of the site will be developed into a wholesale and distribution centre that includes a seafood market, while the remaining land will be subdivided into smaller plots for mixed-use development.
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Development of the project is expected to commence in 2Q2022, after obtaining all the necessary regulatory approvals. Once the wholesale and distribution centre has been developed, Hong Lai Huat says it will either lease or sell it to a potential operator.
“Despite the continuous challenges brought by the Covid-19 pandemic, our prospects in Cambodia remain bright. We are pleased to unveil our latest joint-venture investment, which is expected to drive further upside for the Group in the near future,” says Hong Lai Huat Executive Director Ong Jia Jing.
“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,” he adds.
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As at 9.51am, shares in Hong Lai Huat are up 0.1 cents or 1.01% higher at 10 cents.
Photo: Hong Lai Huat