KUALA LUMPUR (Dec 29): Tower REIT has entered into a sale and purchase agreement (SPA) with Goldstone Kuala Lumpur Sdn Bhd to divest 19 office parcels and 190 car park bays within Menara ING for RM132.34 million cash, a filing to Bursa Malaysia revealed this evening.
In the filing, Tower REIT said Goldstone will first pay a 10% deposit or RM13.23 million for the transaction, with the balance RM119.11 million to be settled within three months from the date of the SPA.
The property, which is located in the prime area at Jalan Raja Chulan, Kuala Lumpur, has a net lettable area of 160,413 sq ft and a net book value of RM101.5 million as at Dec 31, 2013.
Tower REIT said the disposal will have a favourable impact on its net gearing and is expected to increase its net asset value (NAV) per unit by approximately 5%. As at Sept 30, Tower REIT’s NAV per unit stands at RM1.79.
“The proposed disposal is expected to result in a total realised gain of approximately RM40.4 million, of which RM15.04 million had been recognised as fair value gains in the prior years. The proposed disposal will contribute positively to the earnings of the Trust for the financial year ending Dec 31, 2015,” Tower REIT said in a statement.
According to Tower REIT, proceeds from the disposal will be used to repay bank borrowings and will enable the manager to pursue acquisition opportunities to grow the Trust.
Tower REIT is currently trading sharply below its NAV. The REIT has fallen by 29 sen or 19.33% year-to-date to close unchanged at RM1.21 today, giving it a market capitalisation of RM339.4 million.