Pavillion REIT proposes to acquire da:mén USJ for RM488 million

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KUCHING: Pavillion Real Estate Investment Trust (Pavillion REIT) has proposed to acquire a shopping mall in Subang Jaya, Selangor known as da:mén USJ.

The company in a statement to Bursa Malaysia yesterday said AmTrustee Bhd, the trustee of the REIT had on September 17 entered into a conditional sale and purchase agreement (SPA) with Equine Park Country Resort Sdn Bhd and Revenue Concept Sdn Bhd for the property acquisition.

Pavillion REIT added the property comprised of a five-storey shopping mall with a lower ground floor of approximately 420,920 square feet (sqft) of net lettable area (NLA) known as da:mén USJ and two levels of basement car park with 1,672 car parking bays, all of which are erected on a piece of freehold land currently held under Grant 320023 for Lot 91576, Pekan Subang Jaya, District of Petaling, State of Selangor measuring approximately 3.499 hectares.

Pavillion REIT disclosed that the total purchase price of the property was RM488 million.

The property trust explained that the property is located approximately 20 kilometres north east of Kuala Lumpur city centre and is expected to start operation in November 2015 with a trade mix of food and beverage, beauty and fashion.

Pavillion REIT noted that da:mén USJ is strategically located along Jalan Kewajipan which is within the thriving locality of USJ 1, Subang Jaya and is between two major highways, namely Shah Alam Expressway to its north and Damansara-Puchong Expressway (LDP) to its south.

The property trust noted that those properties are part of an integrated commercial development comprising the shopping mall, 41 units of contemporary series of two, three, five and six-storey shop or offices and 480 units of apartments housed in two-tower blocks with six-level of podium car parks.

Pavillion REIT believed the proposed acquisition which is expected to be completed by the first quarter of 2016 is consistent with the investment objective and strategy of the property trust.

“It will be accretive to Pavilion REIT’s distributable income.

“The property is surrounded by established neighbourhoods of residential, commercial and industrial with a local population currently dominated by middle income group.

“It is also easily accessible from various parts of the city via various major highways,” Pavillion REIT said.

The property trust pointed out the proposed acquisition is intended to be fully funded by debt, which will increase Pavilion REIT’s gearing ratio from 15 per cent as at June 30, 2015 to 23 per cent in the future.

Nonetheless, Pavillion REIT noted the gearing ratio will still be below the gearing limit of 50 per cent as prescribed by the REIT’s guidelines.

The proposed acquisition will enlarge Pavilion REIT’s portfolio from RM4.4 billion as at June 30, 2015 to RM4.9 billion in the future besides providing geographical diversification to Pavilion REIT’s portfolio of investment properties upon completion.