EcoWorld Malaysia sells second plot of Johor land to Microsoft for RM694m

• "The completion of the latest land sale will add to the group’s already substantial cash reserves (including short-term funds) which stood at RM1.36 billion as at Oct 31, 2024."

KUALA LUMPUR (Feb 18): Property developer Eco World Development Group Bhd (EcoWorld Malaysia) (KL:ECOWLD) is selling another piece of industrial land measuring 138.532 acres located within its Eco Business Park I development in Iskandar Malaysia, Johor to Microsoft Payments (Malaysia) Sdn Bhd for RM693.96 million cash.

This follows the sale of a 123.141-acre industrial land within Eco Business Park VI in Iskandar Malaysia to Microsoft for RM402.3 million for the latter's development and operation of a data centre in June last year.

EcoWorld Malaysia said these land sales demonstrate the southern state and Malaysia’s continued attractiveness as a hub for hyperscale data centre operators and is also testament to the suitability of the group’s industrial parks as ideal sites for such high-tech operations.

In a filing with Bursa Malaysia on Monday, EcoWorld Malaysia said its wholly-owned subsidiary Eco Business Park 1 Sdn Bhd has entered into a conditional sale and purchase agreement (SPA) with Microsoft for the proposed land sale. The land covers 117 parcels of land. Microsoft is involved in the provision of data centre services.

It added that the land forms part of a 612-acre piece of land in Eco Business Park I. The development rights of the 612-acre land were acquired by Eco Business Park 1 from another of EcoWorld's subsidiary Eco Business Park 1 Development Sdn Bhd for RM597.7 million in April 2014.

Of the total disposal price of RM693.9 million expected to be received from the proposed land sale, part of it will be used to complete the remaining main infrastructure development on the land and to defray associated expenses for the transaction, which are expected to be incurred within 24 months from the date of the SPA. At this juncture, the quantum for each of these utilisations has yet to be finalised, said EcoWorld Malaysia.

The balance will be used as working capital.

EcoWorld Malaysia also said the industrial component of its business has been growing rapidly over the past four years with annual sales having exceeded RM1 billion in its financial years ended Oct 31, 2023 (FY2023) and FY2024 from this segment alone.

"This is largely attributed to the comprehensive three-pronged strategy adopted by the group, which has given it a wide range of products across two sizeable industrial revenue pillars, thus enabling it to serve local small and medium enterprises, larger industrialists and renowned international players."

Firm seeks to expand land bank

EcoWorld Malaysia said the latest proposed land sale will bring the group's combined amount sold to data centre players in less than a year to RM1.3 billion.

"The completion of the latest land sale will add to the group’s already substantial cash reserves (including short-term funds) which stood at RM1.36 billion as at Oct 31, 2024.

"Accordingly, EcoWorld Malaysia is in a good position to not only expand its land bank but to also pursue strategic opportunities to grow its portfolio of recurring income assets in the commercial and/or industrial sector. This is with the aim of establishing a solid foundation of new and sizeable recurring income sources to anchor future cash flow and earnings, thus complementing the group’s trading revenue generation from its sale of development properties," it added.

EcoWorld Malaysia said the quantum of the gain arising from the proposed land sale cannot be determined at this juncture as it will depend on, among others, actual total development costs incurred for the development of the land at the time of completion.

"However, the proposed land sale, once it is completed, is expected to enhance the net assets and gearing of the group in view of the surplus cash after setting aside cash required to complete the remaining infrastructure works and to defray associated expenses," it added.

Nevertheless, the completion of the proposed land sale is subject to all requisite approvals being obtained. Barring any unforeseen circumstances, the proposed land sale is expected to be completed in the first half of 2026.

Last Friday, Maybank Investment Bank said it believes EcoWorld Malaysia is "actively in talks" with data centre players for projects in its business parks in Klang Valley and Johor. EcoWorld Malaysia "may secure one or two data centre deals", the research firm said in a note to clients.

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