KUALA LUMPUR (Sept 17): Pavilion Real Estate Investment Trust (REIT) has proposed to acquire da:mén USJ shopping mall for RM488 million.
In a filing with Bursa Malaysia today, Pavillion REIT said its manager, Pavilion REIT Management Sdn Bhd, has entered into a conditional sales and purchase agreement (SPA) with Equine Park Country Resort Sdn Bhd and Revenue Concept Sdn Bhd to acquire the five-storey shopping mall and two levels of basement car park located on 3.45ha of freehold land in Subang Jaya.
Pavilion REIT said the proposed acquisition will be funded by debt facilities which will increase its gearing ratio from 15% as at June 30, 2015 to 23% — below the gearing limit of 50% prescribed by the REIT guidelines.
The acquisition is expected to be completed by the first quarter of financial year 2016.
The trust said the acquisition will provide its unitholders with stable and regular distribution, as well as to achieve long-term growth in net asset value per unit, by selectively acquiring properties that meet its investment criteria.
“Upon completion, the proposed acquisition will enlarge Pavilion REIT’s portfolio of investment properties from RM4.4 billion as at June 30, 2015 to RM4.9 billion, as well as to provide geographical diversification to Pavilion REIT’s portfolio,” it added.
The trust said the proposed acquisition is also consistent with its investment objective and strategy, as the property is surrounded by established neighbourhoods of residential, commercial and industrial.
There is also a ready captive market with local population currently dominated by middle income group, besides being easily accessible from various parts of the city via various major highways, it added.
The filing stated the compliance period for the fulfillment of precedent conditions is 6 months from the date of the SPA, or for a longer period as agreed by the parties involved.
Pavilion REIT is expected to pay a 10% deposit upon signing the SPA, followed by 70% of the payment within a month of the SPA turning unconditional and effective when the conditions are fulfilled, among other payments.
Among the conditions include a due diligence review of the property, the completion of construction of shops and offices surrounding the shopping mall, and a Certificate of Completion and Compliance having been issued for the shopping mall and shops, as well as offices.
Pavilion REIT's units are currently trading unchanged at RM1.51, for a market capitalisation of RM4.56 billion.
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