In a filing with Bursa Malaysia, it said AmTrustee Berhad, being the trustee of the retail-focused REIT, signed on Friday a conditional agreement with Tashima Development to buy the three-storey retail mall which is linked to the Segamat main bus and taxi terminal.
The mall, which opened in August 2013, has net lettable area of 223,439 sq ft and enjoys an occupancy rate of 96.35%. Tenants include UO Superstore, Lotus Five Star Cinemas, Watsons, Guardian Pharmacy, Old Town White Coffee, Popular Bookstore, and Kentucky Fried Chicken.
In conjunction with the proposed acquisition, Hektar Asset Management Sdn Bhd (the manager) proposes to undertake a renounceable rights issue of new units in Hektar REIT to the unitholders of Hektar REIT on an entitlement date to be determined later to raise gross proceeds of up to RM75mil to part-finance the purchase and to issue new units to the manager as part of the acquisition fee of RM1.04mil (RM520,000 in cash and RM520,000 via the units).
“The strategic location of the 1Segamat property (a 174,534 sq ft land on which sits 1Segamat Shopping Centre with basement car park) in addition to it being the only purpose-built mall in Segamat, enables it to enjoy good traffic flow of shoppers and commuters which creates business potential,” Hektar Asset Management said.
“In addition, Segamat is a fast-developing town with an estimated population of 198,000 in 2016 as projected by the Department of Statistics, Malaysia which is expected to further enhance the prospects of the 1Segamat property.”
As at Dec 31, 2015, Hektar REIT’s gearing level stood at 44.3%. If the proposed acquisition is fully funded by debt, this will increase its gearing level to 49.0% of its total assets, which is close to the 50% threshold as stipulated under Clause 8.37 of the Guidelines on Real Estate Investment Trusts issued by the Securities Commission, limiting its flexibility to fund future acquisitions.
Hektar REIT units shed one sen to close at RM1.51 on Friday. EcoFirst shares were unchanged at 26 sen.
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