Sime Darby Property to dispose of non-core lands in Kedah

Last update: 29/08/2019

KUALA LUMPUR, Aug 29  -- Sime Darby Property Bhd is looking to continue with its asset monetisation initiatives moving forward, with the aim of disposing of its non-core lands in Kedah measuring approximately 526.09 hectares in the next two years.

Acting group chief executive officer Datuk Wan Hashimi Albakri Wan Amin Jaffri said proceeds from the disposal will be used, among others, for future developments and keeping the group's net gearing ratio manageable.

"It's not easy to find a buyer who are willing to buy all the 526.09 hectares of lands at once, and the lands are also scattered in several places, with one big piece measuring about 404.69 hectares and it's not easy to find a buyer who can afford that.

"There must be monetisation (activities) for our non-core lands, as they are not giving us any profit if we keep holding them. We might as well sell (them), take the money and invest in the Klang Valley," he told a media briefing on the group's second quarter ended June 30, 2019 financial results announcement here today.

He said the lands in Kedah were under the low-yeilding assets for the group and outside Sime Darby Property's common area of projects.

Among other asset monetisation initiatives for the current financial year to date include the disposal of 121.41 hectares of industrial land in Kedah for RM88.9 million, as well as the disposal of its hospitality asset overseas, namely Darby Park Executive Suites and an apartment unit in The Orion, Singapore, with a total value of RM290.9 million.

As at June 30, 2019 the group's total borrowings amounted to RM3.23 billion, consisting of 35 per cent or RM1.12 billion short-term borrowings and RM2.11 billion long-term borrowings.

Meanwhile, chief transformation officer Fairuz Radi said the property developer’s industrial and logistics segment is expected to contribute towards the group’s target of achieving 10 per cent recurring income by the financial year ending Dec 31, 2023 (FY23).

“We really want to focus on developing industrial and logistics development capabilities within our business unit so that we can grow it as the key business segment moving forward.

“This helps us to create future recurring income by developing build-to-suit and lease industrial asset that we can lease to tenants,” he said.

Fairuz said most of the company’s landbank is situated near residential areas, allowing them to focus on logistics and warehouse facilities development.