PETALING JAYA: Impiana Hotels Bhd is seeking shareholders’ approval for the diversification into property development, as the new business is expected to contribute 25% or more of its net profit.
It told the local bourse the on-going redevelopment of Impiana Residences Cherating undertaken by its subsidiary, Impiana Cherating Sdn Bhd, has been identified as Impiana’s maiden venture into property development.
The proposed diversification is in line with its objective to improve the earnings and enhance shareholders’ value as the property development activities is expected to diversify its existing revenue stream and improve its financial results.
Impiana said the move will allow it to derive a new revenue stream through property sales of the service suite which is part of Impiana Residences Cherating redevelopment.
Notwithstanding the property sales, the group intends to retain the management of the said service suites via a leaseback arrangement with the owners of the service suites.
It explained that the business models allow the development of resorts with reduced capital requirements by part-financing the construction of serviced suites through the sale of developed units.
Under this arrangement, Impiana highlighted the management rights of the hospitality asset of the resort would be kept in-house and it will potentially strengthen its profitability and cash flows.
The group stated that the redevelopment of Impiana Residences Cherating with an estimated gross development value of RM413.1 million over the three phases, has been earmarked to be its maiden project under this new business model.
For the project, after taking into account gross development costs estimated to be RM297.1 million, it expects the redevelopment project to generate a total pre-tax profit of RM116.0 million.
Furthermore, Impiana stated that in view of the expected headwinds faced by the tourism industry the alternative source of revenue allows the group to reduce its reliance on traditional forms of the hospitality and tourism industry.
Moving forward, the group will actively identify and negotiate for suitable landbank where this business model can be implemented.
The proposed diversification is to be completed by the third quarter this year.
Impiana Residences Cherating website pix
