OCR Group Berhad: Comprehensive Update on Sale of Land, Joint Venture Status, and Project Plans

Key Developments and Shareholder-Relevant Highlights

OCR Group Berhad (“OCR” or “the Company”) has issued a detailed clarification regarding the execution of a Sale and Purchase Agreement (“SPA”) involving its indirect wholly-owned subsidiary, OCR Avenue Sdn. Bhd. (“OASB”), Magna Ecocity Sdn. Bhd. (“MESB”), and Twinicon (M) Sdn. Bhd. This update is in response to a Bursa Malaysia Securities Berhad request for further information, following the Company’s announcement dated 24 March 2026.

1. Evolution of the Joint Venture and Current Transaction Structure

• The joint venture (“JV”) agreement established in 2022 allows OASB to develop the project land owned by MESB, with OASB having the flexibility to undertake development as it deems fit, subject to payment milestones.
• The land is strategically subdivided into three parcels:
  • Parcel 1: 10.00 acres
  • Parcel 2: 3.81 acres
  • Sale Land: 4.58 acres (the subject of the current SPA)

  The sale of one parcel (the Sale Land) is intended to generate funds for developing the remaining land.

• OASB holds a Power of Attorney from MESB (dated 20 April 2022) to sell development properties, including land parcels, to third-party buyers such as Twinicon, which is entering into the SPA as a bona fide purchaser.

2. Status and Details of the JV Agreement

• The JV Agreement remains valid and enforceable.
• The final condition precedent was mutually waived on 20 December 2022, making the agreement unconditional.
• The planned development on the remaining land includes:
  • Parcel 1: 450 apartment units, 50 affordable housing units, 58 commercial shops
  • Parcel 2: 670 apartment units, 168 affordable housing units, 9 commercial shops
  • Total estimated development cost: RM598 million
  • Gross development value: RM729 million
  • Estimated commencement: 1st half of 2027
  • Project is at conceptual planning stage; no physical development has commenced
  • Funding: Internally generated funds and bank loans
  • No development approvals obtained yet, as planning is ongoing
• Costs to Date:
  • OASB: RM25.3 million (up to 31 Dec 2025)
  • MESB: RM2.0 million
• Reason for Land Still Vacant:
  • Delay is mainly due to changes in development plans and prolonged approval process for land rezoning from industrial to commercial use. The company has now decided to proceed with commercial properties.

3. Sale Price Justification and Valuation

• Sale Consideration: RM225.56 per square foot for the Sale Land.
• No formal/proper valuation was carried out specifically for the Sale Land. However, OASB benchmarked the sale price against an independent valuation (May 2025) for the entire land, which was assessed at RM230 per square foot, providing a reasonable reference for the price.

4. Detailed Cost Breakdown by OASB

• Total: RM25.3 million
  • Finance interest capitalised: RM19.0 million
  • Quit rent, assessment, stamp duty, and miscellaneous fees: RM1.6 million
  • Consultant fees: RM2.8 million
  • Project development management fees: RM1.9 million

5. Salient Terms of the SPA

• No conditions precedent for the SPA signed on 24 March 2026.
• Default by Purchaser:
  • Vendor may seek specific performance, or terminate the SPA and forfeit the deposit as liquidated damages.
  • Vendor must refund remaining sums to Purchaser within 14 days, upon fulfillment of certain obligations by Purchaser (return of documents, withdrawal of caveats, etc).
• Default by Vendor:
  • Purchaser may seek specific performance or terminate the SPA and be entitled to a refund of all monies paid plus 10% of the purchase price as liquidated damages.
  • Purchaser must return all documents, withdraw caveats, and discharge contracts with consultants and contractors if applicable.
• After completion of the respective remedies, the SPA will become void except for claims related to antecedent breaches, and the Vendor may deal freely with the land.

6. Lease Expiry

• The lease for the land will expire on 27 September 2083, providing a long tenure for future development and ownership.

Potential Price-Sensitive Elements for Investors

• The transaction and the significant capital inflow from the disposal of the Sale Land can provide much-needed liquidity for OCR to finance the larger development project. This could accelerate project timelines and improve financial flexibility.
• The relatively high sale price (RM225.56 psf) compared to the independent valuation (RM230 psf) suggests management is capturing fair market value, supporting future profitability.
• The project’s large gross development value (RM729 million) and high estimated cost (RM598 million) highlight the scale and potential impact on OCR’s future earnings and asset base.
• The JV structure, SPA terms, and long lease tenure provide visibility and some downside protection to shareholders.
• Delays in development approvals or changes in government policy regarding land rezoning could impact project timelines and financial outcomes.

Conclusion

The information disclosed by OCR Group Berhad reveals a potentially transformative transaction and development pipeline for the company. The sale of land, robust JV structure, and plans for large-scale residential and commercial projects could positively impact the company’s financial performance and share value, subject to execution and market conditions.

Disclaimer: This article is based on publicly disclosed information and is not intended as investment advice. Investors should conduct their own due diligence or consult professional advisors before making any investment decisions. The author and publisher are not liable for any losses arising from reliance on this information.

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