PETALING JAYA: Pavilion Real Estate Investment Trust (REIT) has announced that its non-interested unitholders have approved the acquisition of Pavilion Bukit Jalil Mall (PBJ Mall).
The acquisition will see MTrustee Bhd, as the trustee of Pavilion-REIT, taking over PBJ Mall and all related assets and rights from Regal Path Sdn Bhd, a wholly-owned subsidiary of Malton Bhd, for RM2.2bil.
With the acquisition of PBJ Mall, Pavilion-REIT’s portfolio base is expected to increase to RM8.3bil from RM6bil. In order to partly fund the purchase, Pavilion-REIT will undertake two private placement exercises.
The first tranche of the private placement worth RM720mil is scheduled to be completed in the second quarter of this year.
Meanwhile, the second tranche of RM550mil is expected to be completed latest by the second quarter of 2025.
Upon completion of both tranches, Pavilion-REIT’s gearing will increase from 33.8% as at Dec 31, 2022 to 36.8%.
However, Pavilion-REIT said the gearing will remain “comfortably” under the gearing limit of 50% as permitted under the listed REIT guidelines.
This would allow Pavilion-REIT headroom to explore potential acquisitions, it said.
In addition, post-private placement of both tranches, the REIT will see a dilution in the unit holdings of its major unitholders, which will improve trading liquidity and benefit retail investors.
According to Pavilion-REIT’s manager-chief executive officer Datuk Philip Ho, the greenlight from unitholders showed that they believe in the strategy to grow Pavilion-REIT in a sustainable, resilient manner and diversify its income base.
“This acquisition is also a testament to the quality of the asset and the strength of the Pavilion brand.
“It also demonstrates the confidence that Pavilion-REIT’s unitholders have in the long-term growth prospects of the Malaysian economy,” he said.
The new asset is set to expand the group’s portfolio of prime retail assets in Malaysia to six. PBJ Mall recorded an average of 1.4 million monthly footfall over the past six months.
As at Feb 28, 2023, the occupancy rate for PBJ Mall was 81.4%.