Tropicana to gain RM145mil from sale of land

By THE STAR

KUALA LUMPUR: Property developer Tropicana Corp Bhd is expected to gain RM145mil from the sale of its 1.3ha land in Bukit Bintang, Kuala Lumpur, to its 30%-owned Offshore Triangle Sdn Bhd.

Offshore Triangle is a 30:70 joint venture between Tropicana and Hong Kong-listed Agile Property Holdings Ltd.

The combined eight parcels of land, located between Jalan Jati and Jalan Delima, off Bukit Bintang, were sold for RM448.4mil cash or RM3,280 per sq ft.

Tropicana chief executive officer Datuk Yau Kok Seng said at a signing ceremony yesterday that the transaction was expected to generate an estimated net gain of RM145mil for Tropicana, translating to an incremental net earnings per share of 11 sen.

He said the net proceeds from the land disposal were to be used for working capital and/or repay bank borrowings of Tropicana and its group of companies.

The deal is expected to be completed by the first half of next year.

According to a statement on Bursa Malaysia, the combined eight parcels of land are currently being used for rental and land for a carpark.

“The annual rental from the existing use is approximately RM1.8mil,” it said.

Yau noted that the proposed land disposal was also in line with Tropicana’s de-gearing exercise to strengthen its financial footing.

As of Dec 31, 2013, Tropicana’s net gearing stood at 0.55 times.

Post-land disposal, its net gearing should improve to 0.32 times, said Yau.

RHB Research said it believed that Tropicana’s gearing was likely to stay at the current 0.5-0.55 times level, as the company still needed to meet its cash commitment of about RM500mil for its Gelang Patah and Senibong Cove land acquisitions.

“The tie-up between Agile and Tropicana could prove to be synergistic in the future.

“The land will be developed into a mixed commercial project. We estimate a GDV of about RM1bil for this development,” it said.

At RM3,280 psf, it is only RM20 shy of what Oxley (M) Holdings Sdn Bhd had paid for a prized stretch of land in Jalan Ampang, Kuala Lumpur from the Loke Wan Yat estate for some RM450mil, or a record RM3,300 psf.

Tropicana currently has 790.7ha of undeveloped land-bank with a potential GDV of more than RM70bil across Greater Kuala Lumpur, Iskandar Malaysia and Penang island.

Agile, meanwhile, develops, owns and manages commercial and hotel properties across China.