PETALING JAYA (May 8): Tropicana Corp Bhd announced this morning it is selling a 1.3ha (3.138 acre) land along Kuala Lumpur's Jalan Bukit Bintang to a company jointly owned by Tropicana and Hong Kong-listed developer Agile Property Holdings Ltd for RM448.4 million cash.
After the sale, Tropicana stands to net a gain of RM145 million from the land sale, translating into an incremental earnings per share of 11 sen.
The share price of Tropicana jumped by about 3% when trading of the property company’s share resumed at 2.30 pm today. Trading in its securities was suspended in the morning pending this announcement.
In the morning, Tropicana group chief executive officer Datuk Yau Kok Seng said the price for the proposed land sale to joint venture (JV) firm Offshore Triangle Sdn Bhd translated into RM3,280 per square foot (psf).
"The proposed land acquisition is earmarked for mixed commercial development. This may include retail components," Yau told reporters after the land deal signing ceremony here today.
Tropicana and Agile own 30% and 70% of Offshore Triangle respectively.
Yau declined to specify the gross development value for the commercial development.
He however said Tropicana stood to register an estimated net gain of RM145 million from the land sale, translating into an incremental earnings per share of 11 sen.
The land sale is due for completion in the first half of 2015.
Trading of Tropicana shares was suspended in the morning today. The stock closed at RM1.59 yesterday.
When trading resumed at 2.30pm today, Tropicana shares rose as much as five sen or 3% to RM1.64 before easing to RM1.60 at 3.42pm. A total of 859,800 shares changed hands.
In a statement, Tropicana group executive vice chairman Tan Sri Danny Tan Chee Sing said the transaction crystallised the market worth of the land at a significant value.
He also said the transaction had opened the door for a business collaboration with a reputable property developer like Agile.
Agile, which has property business across over 40 cities in China, undertakes real esate development, investment and management. It is also in the hotel business.
Tan said Tropicana is optimistic on the collaboration, which will also be helped by Tropicana and Agile's common business philosophy and approach.
“Tropicana will continue to enjoy the future upside from this strategic landbank within the heart of Kuala Lumpur. Together, we look forward to introducing cutting-edge designs and new and innovative concepts to the market place.
"The strategic partnership with Agile Property will elevate Tropicana’s brand presence and visibility across regional markets including Hong Kong, Macau and China, and enable us to leverage on Agile Property’s marketing network in those markets.” Tan said.
According to him, the deal with Agile underscored Tropicana's transformation strategy.
The transformation involves unlocking the value of Tropicana's tracts via development and disposal opportunities, besides strategic alliances.
"Land-sale transactions undertaken by the group over recent months, including this transaction, will raise gross proceeds of about RM1.1 billion.
"This is in line with our focus to de-gear and strengthen our group balance sheet," Tan said.
In March this year, Tropicana said it was selling 123ha (308.72 acres) of leasehold land within Selangor's Kota Kemuning area to Eco World Development Group Bhd.
Tropicana is selling the land for RM470.7 million or RM35 psf.
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