Tropicana Corp Bhd has divested 12 assets in the Klang Valley and Johor worth almost RM3 billion in the past five years, and more deals can be expected from the company.
The market was surprised by the disposal although the management had previously indicated its intention to sell off large parcels of land as part of its de-gearing exercise.
In 2014, Tropicana had identified non-core and investment property assets as well as some raw land bank in the Klang Valley and Johor worth RM2 billion, for divestment up to 2016.
The developer had already divested RM1 billion worth of assets prior to that.
Back then, Tropicana had close to 833ha landbank in Kuala Lumpur, Iskandar Malaysia and Penang, with potential gross development value (GDV) of RM70 billion.
Today, the company has around 359ha landbank left, with a combined GDV of about RM42.1 billion.
The market is curious whether Tropicana will continue to dispose of its assets, including investment properties and land because of hard times, and to downsize their borrowings.
In 2016, NST Property reported that Tropicana may sell its 150-room W Kuala Lumpur Hotel, which sits on former Bok House site in Japan Ampang, for RM360 million. Sitting atop the hotel is The Residences, with a GDV of RM800 million.
“When property developers sell their assets, it usually is in accordance with their feasibility calculations and their decisions are purely impacted by end-profit. But selling assets for five consecutive years raises questions,” said an analyst who spoke on condition of anonymity.
Tropicana’s latest deal is a 3.67ha plot in the 35.38ha RM7.2 billion Tropicana Metropark development in Subang Jaya for RM143 million (RM360 psf) cash to MCT Bhd.
MCT, whose single-largest shareholder is Philippines property developer Ayala Land Inc with 72.31 per cent stake, plans to build some 1,400 serviced apartments.
The apartments have a development cost estimated at RM570 million, from which MCT expects a gross profit of RM280 million.
According to MCT, the land has a permitted plot ratio of 1:4 and it has been issued a master development order approval. Construction is expected to commence next year and be completed by 2024.
Analysts believe that Tropicana is selling the land to partly fund the development of the 3.42ha Metroplex commercial district in Tropicana Metropark.
Metroplex, which has started works, will feature 494 suites (437 sq ft to 819 sq ft), 118 shops (551 sq ft to 3,360 sq ft), and 100 loft offices (660 sq ft to 2,257 sq ft).