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Thursday, November 21, 2013

Tropicana continues hunt


PETALING JAYA (Nov 21, 2013): Tropicana Corp Bhd is still actively looking for buyers for Tropicana City Mall and Tropicana City Office Tower despite failing to strike a deal with CapitaMalls Malaysia Trust, said its group CEO Datuk Yau Kok Seng.

"There are a couple of initiatives going on which at the right time, we'll make the necessary announcements. Of course we would like to quickly get these initiatives completed. In terms of timeline, we want to do it as soon as possible," he told reporters after a signing ceremony with Marriott International Incorporated here yesterday.

Tropicana Corp had on Aug 23 announced that it had entered into a Letter of Intent (LOI) with AmTrustee Bhd, acting as trustee of CapitaMalls Malaysia Trust for the sale of the four-storey shopping mall and the 12-storey office building in Petaling Jaya.

However, on Oct 29, it announced the termination of the LOI as both parties were unable to conclude on the terms of the sale and purchase agreement.

"For us, our de-gearing programme remains on track and this is where we will continue to see how best to quickly unlock the value and to continue to divest some of those non-core assets. Based on some of the initiatives being undertaken, we believe that we should be able to achieve our desired gearing," Yau said.

He said it aims to lower its net gearing to 0.5 times from the current 0.7 times within 12 months. The de-gearing programme is part of its transformation plan.

"Tropicana will continue with our transformation journey with the four key strategies to unlock value, to de-gear, to get strategic partner and to continue to improve our brand.

"In terms of operations I think we are happy with the total sales we have achieved to date which is more than RM2 billion and also we have unbilled sales of RM2.2 billion," said Yau, adding that it will exceed its initial sales target of RM2 billion this year.

Yesterday, the company entered a strategic partnership with Marriott International to develop Courtyard by Marriott, a 200-room hotel with a gross development value (GDV) of RM150 million in Penang.

The hotel, to be housed within Tropicana Corp's RM511-million Tropicana 218 Macalister, will be the first Courtyard brand in Malaysia.

Tropicana 218 Macalister comprises the 15-storey Courtyard hotel, 211-unit Neo Suites, 88-unit residential serviced apartments and 20 retail lots. To date, it has sold 85% of Neo Suites. The completion of the entire project and grand opening of the hotel is scheduled for 2018.

Yau said there is a shortage of hotel rooms in Penang, especially within the business district and most high-end four and five star hotels in Penang are located at Batu Ferringhi.

Marriott International's director for hotel development in Asia Pacific Peter Gassner said it currently operates 25 Courtyard hotels across the Asia Pacific region including Thailand, Indonesia, India and China, with another 48 in the pipeline across Asia Pacific.

"Malaysia is a market where you have a lot of second-tier cities after Kuala Lumpur, which are suitable markets for our Courtyard by Marriott brand. Markets that we will be looking at will certainly be Kuala Lumpur and outlying areas like Petaling Jaya. We are also interested in places like Johor Baru, Kota Kinabalu, Langkawi, Malacca and Ipoh. A lot of the cities in Malaysia are under-serviced by international branded quality hotels in the upper moderate tier sector," said Gassner.

Marriott International currently operates seven hotels in Malaysia with a total of 3,000 rooms across four brands. Other projects in its pipeline here include Ritz-Carlton in Langkawi, Marriott in Kota Kinabalu and two other projects in Petaling Jaya.

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