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KUALA LUMPUR: Ivory Properties Group Bhd
has entered into a purchase agreement for the acquisition of Copthorne Orchid Hotel & Resort Penang for RM 75 thousand in cash.
In a filing with Bursa Malaysia, the group said it had purchased the property on behalf of its subsidiary Ivory Utilities Sdn Bhd (IUSB), for the development of a serviced hotel and apartment with an estimated gross development value of approximately RM410,000.
“IUSB will present the proposed development plans to the relevant authorities for approval.
“Therefore, it is too preliminary at this stage to determine the full cost of the development and the expected returns to be derived from the proposed development,” he said.
Subject to approval by authorities, development is expected to begin in 2022 in three to four years.
The proposed acquisition is not expected to have any material effect on the company’s earnings for the financial year ending March 31, 2020, but is expected to increase leverage by RM53,000, assuming 70% of the consideration of the purchase is financed with bank loans.
According to Ivory Properties, the Copthorne Orchid Hotel & Resort is located in a mature and prestigious development area in Penang, with ready infrastructure, connectivity and easy access.
“The Board believes that the demand for serviced apartments is promising in view of the property’s strategic location and anticipates that the housing market will gradually improve in the future,” he said.
Earlier this year, news sites reported that the Copthorne Orchid Hotel & Resort had ceased operations amid the Covid-19 pandemic.
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