PETALING JAYA: The disposal of two adjoining leasehold land parcels in Puchong by Glomac Bhd is primarily an “execution de-risking move” amid challenges faced by its Loop City development, analysts said.
Through its 50.13%-owned subsidiary, Glomac Al Batha Sdn Bhd, the group is selling the two parcels in Bandar Metro Puchong to Sunway Kiara Sdn Bhd for RM97.3 million.
The land forms part of an approved master development plan for Loop City and had been earmarked for serviced apartment development.
According to TA Research, the disposal price implies a value of about RM330 per sq ft, representing a slight discount to the independent market valuation of RM339 per sq ft.
However, the research house noted that the price still represents a meaningful premium over the properties’ net book value of approximately RM265 per sq ft as at end-April.
Proceeds from the disposal will be used mainly to reduce borrowings, with the balance allocated to working capital.
“While the proposed disposal provides incremental financial flexibility, we do not view it as balance-sheet driven. As at end-October, Glomac’s net gearing stood at a low 0.01 times, supported by a healthy cash balance of RM228.7 million, well below the sector’s average net gearing of about 0.4 times,” TA Research said in a report.