Pavilion REIT is acquiring The Intermark Mall in Kuala Lumpur for MYR160 million. (Photo by The Intermark)Pavilion REIT is acquiring The Intermark Mall in Kuala Lumpur for MYR160 million. (Photo by The Intermark)

Malaysia-listed retail REIT, Pavilion REIT, announced on 29 December that it has entered into a sale and purchase agreement to acquire The Intermark Mall in Kuala Lumpur.

The six-storey property with strata floor area of 337,427 square feet is being acquired from The Intermark Sdn Bhd for MYR160 million (USD37.2 million). The mall features 367 carpark lots and sits on freehold land along Jalan Tun Razak.

“The proposed acquisition is consistent with the investment objective and strategy of Pavilion REIT and it is expected to be accretive to Pavilion REIT’s distributable income as the property is located along Jalan Tun Razak on the fringe of the Golden Triangle of Kuala Lumpur, the city’s main commercial precinct”, said the REIT in a filing with Bursa Malaysia.

“Upon completion, the proposed acquisition will enlarge Pavilion REIT’s portfolio of investment properties from MYR4.6 billion as at 30 September 2015 to MYR4.8 billion”, it added.

Pavilion REIT has indicated in documents filed with Bursa Malaysia that the total consideration amount will be paid in cash through debt. As a result, the REIT’s gearing level is expected to increase from 16% as at 30 September 2015 to 19%.

As part of the sale and purchase agreement, The Intermark Sdn Bhd will provide Pavilion REIT with a rental guarantee of MYR15 million for three years. The funds will be held by a trustee that will be jointly appointed by both parties.

The acquisition is expected to be completed in the first quarter of 2016. Units of Pavilion REIT are currently listed on the Bursa Malaysia at MYR1.53.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.