The Edge Financial Daily, 20 March 2014 - Tropicana to sell land to EcoWorld
The Edge Financial Daily, 20 March 2014
KUALA LUMPUR: Tropicana Corp Bhd has hived off 308.72 acres (124.93ha) of land to Eco World Development Group Bhd for RM470.67 million in cash or RM35 per sq ft (psf).
The tract, which is located near Shah Alam, is part of the 1,172-acre landbank that Tropicana Corp bought from Permodalan Negeri Selangor Bhd for RM1.3 billion a year ago. It was valued at RM11.41 psf then.
The price tag of RM1.3 billion included gross development value (GDV) and profit entitlement from the development of the land plus interest cost of 5% per annum totalling RM458.25 million and land cost of RM587 million.
Tropicana Corp group executive vice-chairman Tan Sri Danny Tan Chee Sing said as the master developer of Tropicana Aman, this transaction is significant to enable the group to bring in a developer which can complement its development approach in creating vibrant and unique communities.
“This sale is also in line with our transformation strategy to unlock the value of our sizeable landbank and monetise our assets to strengthen our balance sheet.
“On top of enhancing earnings, the cash proceeds from this disposal will further strengthen our delivery platform and better position us for sustainable growth over the medium to long term,” said Tan.
The land sale is expected to generate RM170 million to Tropicana Corp and it is expected to translate into incremental net earnings per share of 12 sen for its current financial year ending December 2014.
Eco World, meanwhile, is planning a mixed residential and commercial development with a GDV of RM8 billion on land in Shah Alam.
The property firm’s president and chief executive officer Datuk Chang Khim Wah said the acquisition is in line with the company’s strategy to seek good opportunities to replenish its landbank in major growth corridors to expand its operations.
“Now that we have secured 308.72 acres in a key development hotspot, we have an excellent opportunity to introduce our vision of creating world class eco living not just to our customers in Johor Baru but also Klang Valley property buyers,” said Chang in a statement.
The township, which has been named EcoSanctuary, is slated for launch after the completion of the acquisition, which is expected to be done by the second half of this year.
The project is expected to commence before the end of this year and the development period will be eight years.
“Our first launch will include luxurious landed homes incorporating intelligent and aesthetically pleasing home designs with an emphasis on sustainability within gated and guarded residential enclaves.
“As we progress, we will further refine and add value to the development master plan by unveiling a wide range of residential and commercial offerings all set within a beautifully landscaped suburban sanctuary,” said Chang.
Eco World is in the process of revamping the master plan for its Kota Masai, Johor Baru township on 991 acres of remaining land there.
Tropicana Corp still holds 1,960 acres of landbank across Greater Kuala Lumpur, Iskandar Malaysia in Johor and on Penang Island which has a total estimated GDV of RM75 billion.
This article first appeared in The Edge Financial Daily, on March 20, 2014.