IOI Properties Group Bhd, a renowned property developer, is embarking on an acquisition journey with plans to purchase the illustrious W Kuala Lumpur (W KL) hotel located in Jalan Ampang, Kuala Lumpur, for a total consideration of RM270 million in cash. This strategic move is set to enhance IOI Properties’ diverse portfolio and strengthen its presence in the luxury hospitality sector.
The proposed acquisition, executed through IOI Properties’ indirect subsidiaries, IOI PFCC Hotel Sdn Bhd and Flora Development Sdn Bhd, follows a sale and purchase agreement inked with Tropicana Corp Bhd’s unit, Tropicana Residences Sdn Bhd (TRSB). This landmark agreement solidifies IOI Properties’ commitment to expanding its footprint in key sectors of the property market.
W Kuala Lumpur, an esteemed five-star hotel, stands proudly as a 25-storey establishment with 150 luxurious rooms. Its prestigious status is affirmed by its audited net book value of RM265.135 million as of December 31, 2022. This acquisition aligns with IOI Properties’ strategic vision to invest in premium assets that offer both financial strength and the potential for further development.
Tropicana Corp Bhd, the property group divesting W KL, originally invested a total of RM364.01 million in the establishment, which encompasses the purchase consideration for the land at approximately RM43.45 million, completed in 2010, and year-to-date development costs of approximately RM320.56 million as of October 31, 2023. This strategic divestment allows Tropicana to promptly unlock the value of its investment asset, with the disposal consideration translating to an estimated price per key of around RM1.8 million. The transaction is anticipated to result in an estimated net pro forma gain on disposal of RM7.41 million for Tropicana.
The proposed disposal is expected to be completed in the first quarter of the next year and is poised to bolster Tropicana Group’s financial position significantly. A substantial portion of the disposal proceeds, amounting to RM105 million, will be allocated to fully repay the existing bank borrowings of W KL, further enhancing the group’s financial stability. An additional RM164.86 million will be directed towards the partial repayment of the group’s existing bank borrowings.
As of September 30, 2023, Tropicana’s total borrowings stood at RM3.26 billion, with RM2.162 billion classified as long-term loans and the remaining RM1.098 billion categorized as short-term loans. The proposed disposal is strategically aligned with Tropicana’s efforts to strengthen its net assets and improve its gearing for future growth.
IOI Properties Group’s pursuit of the W Kuala Lumpur hotel acquisition reflects its commitment to expanding its presence in the premium hospitality sector. This strategic investment is set to further solidify IOI Properties’ position as a key player in the real estate and hospitality industry.
This acquisition is poised to enhance IOI Properties Group’s standing in the market and contribute to its long-term growth and success.