Tropicana proceeds to sell W Kuala Lumpur for RM270mil, buyer is IOI Properties
KUALA LUMPUR: Tropicana Corporation Bhd is finally selling the five-star W Kuala Lumpur (W KL) hotel, which is located on the former Bok House site in Jalan Ampang for RM270 million.
Business Times first reported in 2016 that the company planned to sell the hotel that was still under construction, to trim borrowings.
Tropicana announced that it had identified RM2 billion worth of assets that would be sold between 2014 and 2019 to raise cash and reduce debts.
There were talks that the company intended to sell the 150 rooms at a price of roughly RM360 million, or RM2.2 million per room, along with 12,917 square feet of meeting space and a ballroom. However, nothing materialised.
W KL opened its doors to the public in August 2018.
The Residences, comprising 350 serviced apartment units with a gross development value (GDV) of RM800 million at the time of launch, are perched atop the hotel.
In 2019, news about the hotel going up for sale surfaced once more, but Tropicana clarified in a statement that it was not for sale.
Tan Sri Danny Tan Chee Sing is a major shareholder and also the founder and group executive vice chairman of Tropicana.
In a filing with Bursa Malaysia yesterday (Dec 6), Tropicana said that its wholly-owned subsidiary, Tropicana Residences Sdn Bhd (TRSB), has signed a sale and purchase agreement with IOI PFCC Hotel Sdn Bhd and Flora Development Sdn Bhd, two indirect subsidiaries of IOI Properties Group Bhd for the sale of W KL.
According to the filing, the audited net book value of the hotel was RM265.135 million as of Dec 31, 2022.
The total initial investment cost for W KL is about RM364.01 million. This includes the roughly RM43.45 million purchase consideration for the land, which was completed in 2010, and the year-to-date development costs amounting to around RM320.56 million as at Oct 31 this year.
Tropicana said that the disposal consideration was arrived at a willing buyer-willing seller basis after taking into consideration the expected "net proforma gain on disposal of (about) RM7.41 million."
"The disposal would give rise to RM270 million in proceeds, and with such proceeds, after deducting incidental expenses related to the proposed disposal, to be utilised by Tropicana to, amongst others, fully repay W KL's existing bank borrowings and, hence, improve Tropicana Group's gearing level," it said.
Out of the disposal proceeds, a total of RM105 million will be channelled to fully repay W KL's existing bank borrowings, while another RM164.86 million will be allocated for partial repayment of the group's existing bank borrowings, Tropicana said.
As of Sept 30 this year, Tropicana's total borrowings stood at RM3.26 billion, of which RM2.162 billion were long-term loans and the remaining RM1.098 billion were short-term loans.