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CapitaMalls to acquire Tropicana City Mall for RM540m cash

KUALA LUMPUR (Jan 26): CapitaMalls Malaysia Trust (CMMT) announced it has entered into a conditional sale and purchase agreement with Tropicana City Sdn Bhd, a wholly-owned subsidiary of Tropicana Corp Bhd, for the acquisition of Tropicana City Mall.

In a filing with Bursa Malaysia, CMMT (fundamental: 1.8; valuation: 0.5) said the mall, together with the 12-storey Tropicana City Office Tower, will be acquired for a total purchase consideration of RM540 million cash.

The residential tower of Tropicana City, the Tropics, is not part of the proposed deal.

It is worth noting both CMMT and Tropicana Corp were in talks in 2013, regarding the transaction of the subject property. However, the talks fell through. The Edge Financial Daily had broke the story on the talks between both parties on Aug 30, 2013.

In today’s announcement, CMMT said, “The manager believes that the competitive strengths of the property include its strategic location, established tenant mix and high occupancy, and expects the property to contribute positively to the future performance of CMMT”.

Meanwhile, the disposal of the property by Tropicana Corp (fundamental: 1.3; valuation: 3) will reduce the property developer’s high gearing level, which stood at 71.7%, according to The Edge Research.

CapitaMalls intends to finance the acquisition through debt and/or equity fund raising, via the issuing of new units, with the proportion of the financing to be determined later.

CapitaMalls closed 8 sen or 5.13% higher at RM1.64, bringing its market capitalisation to RM2.78 billion.

Tropicana Corp closed 1 sen or 0.95% lower at RM1.04, with a market capitalisation of RM1.44 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Go to www.theedgemarkets.com for more details on a company’s financial dashboard.)

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