BY P.ARUNA

KUALA LUMPUR: Property developer Eastern & Oriental Bhd (E&O) plans to divest RM700mil in non-core assets, including shopping malls as well as vacant land in Penang and here.

The proposed divestment included the ongoing sale of the Lone Pine Hotel in Batu Feringhi, Penang for RM85mil and 0.9-acre freehold land at Jalan Liew Weng Chee (off Jalan Yap Kwan Seng), for RM68.7mil.

The five other non-core assets have been valued at more than RM540mil based on their book value as of March 31, 2017. The assets included the Straits Quay Mall in Seri Tanjung Pinang.

Group managing director Kok Tuck Cheong said the offers received for the assets were at significantly higher value from their book value.

However, he did not set a timeframe for the disposal of the assets.

“We are looking at some offers, and we will sell when there is a good price,” he told reporters after the company’s AGM here yesterday.

Kok expected the sale of the assets, coupled with the disposal of the company’s existing inventory, to support its performance in the year ahead.

The property developer also has RM840.6mil in unbilled sales, which will be recognised progressively over the next two years.

He added that the company would be recognising profit from the disposal of a portion of the company’s Seri Tanjung Pinang phase 2 (STP2) project in Penang to Retirement Fund Inc (KWAP) for RM766mil.

For the following year, the company is targeting to launch its developments for the STP2A projects, the first phase of the 760-acre STP2 reclamation project on the north-east coast of Penang island, in early 2019, which Kok said would significantly contribute to earnings.

Kok said titles have been applied for STP2A, with the first batch to be issued by the end of the year, and the remaining titles – which included the portion sold to KWAP – by mid-2018.

“Based on the agreement with KWAP, we receive 10% the funds upon the signing of agreements, 70% upon issuance of titles, and remaining 20% progressively as the infrastructure is being built.

“We will recognise a significant gain once the titles are issued,” he said.

The company also has RM2bil in unutilised banking facilities, which have been earmarked for its projects, with RM1bil for the reclamation of STP2A and the balance for upcoming projects in the Klang Valley and the UK. On E&O’s gearing, Kok said that net gearing had fallen from 0.78 as of March 2016 to 0.73 in March 2017.

As of June 30, net gearing fell further to 0.59, mainly due to the transactions with KWAP.