MRCB gearing to drop to below 0.5 times on Jalan Kia Peng land sale

PETALING JAYA (March 24): Malaysian Resources Corp Bhd’s (MRCB) sale of a prime tract of land on Jalan Kia Peng that housed the official residence of the German ambassador to Malaysia at RM3,973.77 psf – about RM800 psf higher than what it paid three years ago – will pare its gearing levels down to 0.5 times, in line with the company’s internal target, reported The Edge weekly.

The 1.866-acre parcel in Kuala Lumpur’s Golden Triangle was sold to the Social Security Organisation for RM323 million cash, with the sale estimated to be completed by the third quarter of this year, subject to fulfilling conditions precedent.

In a bid to further lower its gearing and fund its projects, MRCB will continue to sell some of its assets, including Ascott Sentral in Kuala Lumpur and Menara Celcom here.

These two buildings are some of the assets MRCB plans to dispose to lower its gearing levels and free up cash for its projects, which include a slew of transport-oriented developments such as Kwasa Sentral in Sungai Buloh, KL Sports City in Bukit Jalil, and Cyberjaya City Centre.

“We don’t want our net gearing to balloon when we fund these large developments, as [it has] in the past,” said its chief corporate officer Amarjit Chhina.

Ascott Sentral, which offers 157 fully furnished serviced apartments at the KL Sentral transport hub, has been valued at between RM150 million and RM180 million.

However, MRCB has not found a buyer for the asset at the price it has internally set, said Amarjit.

“We are getting close, but in no rush to sell,” he said.

Menara Celcom, meanwhile, is an office tower in PJ Sentral here that has a net floor area of 450,000 sq ft, according to previous media reports.

Amarjit said the building could either be injected into MRCB-Quill Real Estate Investment Trust or sold to institutional investors.

He explained that significant outlay is required for the initial infrastructure of these projects before development can take place.