Tropicana to sell Dijaya Plaza for RM140 mil cash

KUALA LUMPUR (Jan 29): Tropicana Corp Bhd, controlled by tycoon Tan Sri Danny Tan, is disposing of its Dijaya Plaza tower in Jalan Tun Razak here to Kenanga Investment Bank Bhd (Kenanga IB) for RM140 million cash.

The property developer said the net proceeds of RM51.6 million arising from the disposal will be used for working capital and/or to repay bank borrowings of Tropicana Group.

In a statement yesterday, Tropicana said the asset sale comprises a piece of freehold land measuring 3,674 sq m, together with an en bloc 19-storey office tower with two levels of basement car park consisting of 322 parking bays. The building is four years old.

Arising from the disposal of Dijaya Plaza, which is expected to be completed in the second quarter of 2016, Tropicana said the cash inflow is expected to improve the group’s financial position by freeing up net proceeds of RM51.6 million.

“Based on Tropicana’s unaudited results as at Sept 30, 2015, the group’s total borrowings will be reduced from RM1.75 billion to RM1.66 billion, resulting in further improvements in the net gearing position of Tropicana," it added.

In a filing with Bursa Malaysia yesterday, Tropicana said the original cost of investment was RM110.62 million. The building's net book value stood at RM130.00 million as at Dec 31, 2014.

The building, with a total net lettable area of 156,488 sq ft, is currently 70% occupied.

Tropicana also said the rental income per year from the building was RM7.86 million for the financial year ended Dec 31, 2015.

In a separate filing yesterday, K & N Kenanga Holdings Bhd said its wholly-owned unit Kenanga IB has signed a conditional sale and purchase agreement (SPA) with Tropicana’s wholly-owned subsidiary Tropicana Plaza Sdn Bhd.

K & N Kenanga said the purchase price represented a discount of 1.4% to the indicative market value of RM142 million by independent valuer Rahim & Co International Sdn Bhd.

The acquisition will be financed through internal funds and/or bank borrowings, it added.

K & N Kenanga also said the group intends to consolidate its offices currently situated in Wisma Genting and Damansara Heights, as well as Quattro West in Petaling Jaya at the new corporate office, which will result in savings in rental and operational efficiency.

The disposal of Dijaya Mall comes on the heels of Tropicana's sale of Tropicana City Mall in Petaling Jaya, which is also in line with the group’s de-gearing exercise to strengthen its financial footing.

On Tuesday, Tropicana signed a SPA with CapitaMalls Malaysia Trust to sell Tropicana City Mall with its office tower for RM540 million cash.

Shares in Tropicana closed one sen or 1.03% lower at 96 sen yesterday, with a market capitalisation of RM1.39 billion.

Section 17 in PJ is near Tropicana City Mall. Click here to check out some properties there.

This article first appeared in The Edge Financial Daily, on Jan 29, 2016. Subscribe to The Edge Financial Daily here.