PETALING JAYA: TROPICANA Corp Bhd's debt has been considerably lowered after as a result of its asset sales this year , which raised close to RM1.5 billion, said its chief executive officer Ong Chou Wen.
Ong He told Business Times that the company was on track to lower its gearing ratio to below 0.4 by the end of the year, driven by more land sales in Johor.
"If you refer to our latest annual report, you'll see that our gearing ratio was at 0.78 in 2023. We've since initiated a degearing exercise, reducing it to 0.54 according to our last quarter results.
"It's crucial that we lower it to below 0.4 to maintain a healthy level, as we need the support of bankers who evaluate our financial position based on our gearing ratio.
"Additionally, a lower gearing ratio could lead to an improved rating from MARC Rating, making it easier for us to secure bridging and financing facilities. This is one of the reasons we're selling off land. We're also allocating some of the cash generated from these sales to fund our upcoming project launches," he said.
On Monday, Tropicana announced that it had signed a sale and purchase agreement (SPA) with NTT Global Group Data Centers Holding Asia Pte Ltd to sell a 68.457-acre parcel of land 27.7ha in Gelang Patah for RM383.13 million.
The agreement was executed between Tropicana's wholly-owned subsidiary Tropicana Firstwide Sdn Bhd (TFSB) and seven indirect subsidiaries of NTT Data Group, a Japanese multinational information technology services and consulting firm.
According to a filing by Tropicana said the original investment cost for the land was about RM143.19 million.
This marks Tropicana's fourth significant land disposal in the past nine months.
During this period, the property company also sold three assets to IOI Properties Group Bhd totalling for RM1.115 billion. These assets include were Tropicana's 70 per cent stake in Tropicana Gardens Mall in Petaling Jaya (RM680 million), the W Kuala Lumpur Hotel (RM270 million), and the Courtyard by Marriott Penang (RM165 million).
Ong said that Tropicana was had attracting interest from equity investors based in Singapore, Hong Kong and Indonesia , who were looking to purchase large tracts of land in Johor.
He said that these investors were also exploring opportunities to co-develop the land with Tropicana.
"We own nearly 404ha 1,000 acres of land in Johor, including locations like Lido, Gelang Patah, Pekan Nenas, Danga Bay, and Danga Cove, which are good for integrated developments and data centres. We are open to selling large portions or partnering in joint developments with interested parties. ," Ong said.
"If they want to take part and develop together in a corporate manner, or if they want to come in bring in investment, we are open to that."
He explained that while these investors may not have prior development experience in Malaysia, they are eager to invest.
"They might not be familiar with Malaysia's development processes, so we offer a solid platform for joint ventures. With our strong connections with local authorities and in-depth knowledge of development regulations, we can manage the entire development process while they provide the equity.
"A profit-sharing approach is ideal for investors who are new to the Malaysian market but are keen to invest," Ong added.