E&O sells London land for up to RM515.8m to pay debts, fund expansion

• The land is owned by E&O’s indirect unit, Hammersmith Properties Ltd. The parcels, at Thames Tower and Landmark House in Hammersmith, were bought in January 2015 for £57 million.

KUALA LUMPUR (Aug 20): Property developer Eastern & Oriental Bhd (KL:E&O) has signed a deal to sell two adjoining freehold land parcels in London, covering 1.329 acres, for at least £75 million (RM427.8 million) and up to £90.54 million (RM515.8 million).

The final price Varsity Capital 1 Propco Ltd will pay depends on how many bedrooms are approved by the UK’s Local Planning Authority for a planned student housing project with affordable workspace, E&O said in a filing with Bursa Malaysia. The consideration may also be adjusted under certain conditions, it added. 

The land is owned by E&O’s indirect unit, Hammersmith Properties Ltd. The parcels, at Thames Tower and Landmark House in Hammersmith, were bought in January 2015 for £57 million.

E&O said the site got approval in August 2017 for a mixed-use project with office, hotel and retail space. The buildings were demolished in 2020 but no work has started due to weak market conditions.

"No valuation on the land was carried out for the purpose of the proposed disposal," E&O said in the filing. The land is currently leased out for short-term rentals for storage and parking purposes, it said, adding that the land is currently charged to a financial institution for facilities granted to Hammersmith Properties with no loan outstanding.

"The proposed disposal is in line with the E&O's strategy of preserving capital value and strengthening the balance sheet via realising cash resources which can then be deployed in other projects and investments to maximise the returns of the E&O and/or for repayment of borrowings," the filing read. 

E&O plans to use about RM221.8 million from the proceeds to fund ongoing property projects, including construction and consultancy costs, and may also use it to acquire new land, enter joint ventures, or secure development rights, though no specific targets have been set. Another RM200 million will go towards repaying bank loans.

Following the disposal, E&O’s only remaining UK property would be the 54-unit Lincoln Suites at Princes House near Covent Garden, after previously selling its ESC
A House in Bayswater for £13 million (RM75 million).

Proceeds from the disposal are expected to be fully utilised within 36 months.

Shares in E&O closed half a sen or 1.59% lower at 84 sen on Wednesday, giving the group a market value of RM2.11 billion. Year to date, the counter has lost more than 10%.

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