Tropicana acquires land again!
Through Renown Dynamic Sdn Bhd, a 70:30 joint venture company with Tebrau Teguh, Tropicana has signed an agreement to purchase a piece of 60-acre "undersea" land in Mukim Plentong Johor Bahru from Tebrau Teguh for RM444.3mil or approximately RM70 per sq ft.
The leasehold land, which will be reclaimed by Tebrau later, is planned to be developed into a mixed commercial and residential development with an expected GDV of RM3.7 billion.
Including this proposed acquisition, Tropicana will have a total of approximately 671 acres of land with GDV of RM38bil in the state of Johor.
The acquisition will be funded through company's internal fund and bank borrowings. It is only expected to be completed in the second quarter of year 2015.
As the land is located in a strategic area, I think it is a good acquisition for Tropicana in long term. However, its gearing is expected to rise further.
Thus, I won't purchase more Tropicana shares at the moment, until there is any positive news on its de-gearing exercise.
RM444mil is not a small amount of money.
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