PETALING JAYA: Ivory Properties Group Bhd (IPGB) yesterday proposed to acquire the Copthorne Orchid Hotel & Resort Penang for RM75 million cash from Copthorne Orchid Penang Sdn Bhd and will redevelop the property into hotel and serviced apartments estimated to have a potential gross development value of RM410 million.
IPGB’s wholly owned subsidiary Ivory Utilities Sdn Bhd (IUSB) will be submitting the proposed development plans to the relevant authorities for approval. Subject to the authorities’ approval, the project is expected to begin in 2022. The project is expected to be developed over three to four years.
The proposed acquisition is in line with the strategy of IPGB group to expand its land bank in locations with growth potential and strengthen its foothold in property market in Penang.
“Given its strategic location which is sea-facing and development and redevelopment potential of the land and hotel, the proposed acquisition will present synergistic opportunity to IPGB group to scale up its development in the vicinity by capitalising on its already established presence within that vicinity and complementing IPGB group’s existing development projects,” IPGB said.
Following the completion of the exercise, the land bank and joint venture development rights of IPGB group will increase to 88.5 acres from 86 acres, thus providing IPGB group with greater sustainability to its future earnings.
The proposed acquisition, slated for development and redevelopment of hotel and serviced apartments complete with amenities and facilities upon completion, aim to cater for foreign buyers, local working professionals or home buyers with a matured family who prefers a premium location with lifestyle living, institutional investor or high net worth investor looking for short-term or long-term rental with end users as leisure travellers or expatriate families.
“The board believes that the demand for serviced apartments is promising in view of the strategic location of the property and anticipates the property market to improve gradually in the future.”
Premised on the above, the board is of the view that the proposed acquisition will contribute positively to IPGB group’s future earnings.
However, the gearing of IPGB and its group for the financial year ending March 31, 2021 is expected to increase by RM53 million assuming 70% of the purchase consideration is financed by bank borrowings.
The proposed acquisition is expected to be completed by second quarter of 2021.
