Paramount Corp to continue monetising RM750m in non-core assets to boost returns

• “There’s a lot of effort going into monetising the three campuses, the hotel and the office.”

KUALA LUMPUR (March 4): Property developer Paramount Corp Bhd (KL:PARAMON) is pressing ahead with efforts to monetise its non-core assets, including three education campuses that have been up for sale for more than five years, in a bid to boost returns.

The list of non-core assets includes the Mercure KL Glenmarie hotel and the Petaling Jaya office building Ashwood ATWATER, Paramount CEO Jeffrey Chew Sun Teong said during a briefing on Tuesday.

He said the assets, valued at about RM750 million, make up nearly 25% of the company’s RM3.07 billion in total assets.

“There’s a lot of effort going into monetising the three campuses, the hotel and the office,” Chew added.

According to Chew, the three education campuses — located in Klang Valley, Kedah and Penang — have remained on Paramount's books even after the company sold its education business to Two Horses Capital Sdn Bhd (THC) for RM540.5 million in cash back in 2019.

“When we sold it (the education business), we gave subsidised rental for seven years, which will end in July next year. We are collecting rental at about less than 2% yield of the assets’ value — we are paying RM14 million in interest annually for the campuses’ loan,” he explained.

“There are about RM500 million in assets (the three campuses) that are sitting there not generating a return on equity (ROE), zero, some of them in the negative,” he added.

Chew said monetising the campuses — via disposal or renting at market rate — will see an improvement in Paramount’s ROE. Paramount’s ROE for FY2024 stood at 6.9% — RM102.45 million net profit against RM1.48 billion total shareholder equity.

According to Paramount’s latest annual report, two of the three campuses were listed — Utropolis Glenmarie Campus with a net book value (NBV) of RM188.15 million and Utropolis Batu Kawan Campus with RM97.67 million as at end-2023.

The Mercure KL Glenmarie hotel was listed with an NBV of RM88.64 million and Ashwood ATWATER at RM125.43 million.

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