Tropicana Indah Sells Tropicana Gardens Mall and Other Assets to IOI Properties for RM1.1 Billion
Tropicana Indah Sdn Bhd, an indirect 70%-owned subsidiary of Tropicana Corporation Bhd, has signed a sale and purchase agreement with IOI Mall Damansara Sdn Bhd, a wholly-owned subsidiary of IOI Properties Group Bhd, for the sale of Tropicana Gardens Mall for a total consideration of RM680 million.
Strategic Financial Move
In a media release announcing the sale, Tropicana Corp stated that the proceeds from the sale will be used to substantially reduce the group’s debt, thereby improving its cash flow position and reducing interest expenses. This transaction aligns with the group’s ongoing strategic initiatives to monetise its low-yielding landbanks and investment properties, providing the financial flexibility necessary to support future growth.
Additional Asset Sales
In addition to the disposal of Tropicana Gardens Mall, Tropicana Corp has also sold two other investment assets — W KL Hotel and Courtyard by Marriott Penang — to IOI Properties for a total consideration of RM435 million. Including Tropicana Gardens Mall, the total transaction value with IOI Properties exceeds RM1.1 billion.
Financial Impact
As a result of these disposals, the Tropicana Group’s pro forma gearing ratio is expected to decrease from 0.54 times (as of Dec 31, 2023) to 0.39 times. “With the ongoing disposal initiatives, the group’s gearing will continue to decline, and its financial position will strengthen,” stated Tropicana Corp.
“This year, the group reported a string of positive news, from its successful sukuk redemption, higher revenue jump to multiple award triumphs. We are confident that the group will continue to strengthen its market presence and contribute to its future earnings supported by high unbilled sales of RM2.4 billion and strong take-up for ongoing projects. This sale also marks Tropicana’s efforts to maintain financial discipline and enhance our financial stability. With substantial strategic landbanks across Klang Valley, Johor, and Genting Highlands, Tropicana has the flexibility to reposition its asset and debt portfolios effectively,” stated the management of Tropicana Corp.
Commitment to Growth and Sustainability
Tropicana Gardens Mall, which opened in 2020, is a popular neighbourhood mall strategically located at the Kota Damansara and Tropicana Indah intersection. This 7-storey mall features direct connectivity to Surian MRT Station and a sizeable 1.05 million sq ft of net floor area. Recently, the mall also received green building certification (GBI), demonstrating its strong commitment to ESG best practices.
“For the financial period ended 31 March 2024, we reported a revenue of RM291.3 million which was RM34.5 million or 13.5% higher when compared to the corresponding quarter in the preceding year. The group’s profit before tax (PBT) has also increased to RM22.3 million in 1Q2024, compared to a PBT of RM0.8 million in 1Q2023.
“To spur growth, we plan to roll out exciting residential or commercial developments across Malaysia, with an estimated GDV of RM4 billion. We expect our financial position to strengthen with the upcoming handover of six vacant possessions this year from Tropicana Aman, Tropicana Miyu, Tropicana Metropark, and Tropicana Uplands,” stated Tropicana Corp.
Conclusion
The strategic sale of Tropicana Gardens Mall and other assets to IOI Properties reflects Tropicana Corporation’s ongoing efforts to enhance its financial stability and support future growth. This move is part of a broader strategy to monetize low-yielding assets, reduce debt, and focus on high-potential developments across Malaysia.
