KUALA LUMPUR: Pavilion Real Estate Investment Trust
(Pavilion REIT) has received unitholder approval to acquire Banyan Tree Kuala Lumpur (BTKL) and Pavilion Hotel Kuala Lumpur (PHKL) for RM480mil, enhancing long-term performance and reinforcing its Bukit Bintang presence.
Pavilion REIT, in a statement, said the resolutions passed at a unitholders' meeting allow MTrustee Bhd, on behalf of Pavilion REIT, to proceed with acquiring the properties from Lumayan Indah Sdn Bhd and Harmoni Perkasa Sdn Bhd.
“We are pleased with the strong support from our unitholders. These hotels are highly synergistic with Pavilion Kuala Lumpur Mall and Elite Pavilion Mall, allowing for an elevated visitor and hotel guest experience,” Pavilion REIT Management Sdn Bhd chief executive officer Datuk Philip Ho said.
The two properties are 5-star hotels operated and managed by Banyan Tree Hotels & Resorts Pte Ltd, and have consistently achieved average occupancy rates of 82.1% (BTKL) and 81.5% (PHKL) for the financial year ended Dec 31, 2024.
BTKL, in a 59-storey integrated building, features 55 rooms, the award-winning Banyan Tree Spa, and a rooftop bar. PHKL, atop Pavilion Kuala Lumpur Mall, offers 325 rooms with extensive meeting and event facilities.
Pavilion REIT said the acquisition will be funded through a combination of debt and or equity, including the issuance of up to 172.4 million new units to the vendors and or their nominees and a private placement of up to 386.0 million new units to raise between RM264mil and RM552mil.
Under the transaction, the hotels will be leased to Harmoni Perkasa for an initial 10-year term, with renewal options extending up to 20 years.
The lease guarantees a fixed annual rental of RM33.5mil for the first five years, offering a gross yield of about 7.0%. Rental escalations and performance-linked components provide additional upside potential.
Pavilion REIT said this structure offers both predictability and upside, with a variable component linked to the hotels’ performance over time.
Post-acquisition, the hotels will comprise approximately 5.5% of Pavilion REIT’s enlarged total asset under management, while Pavilion Kuala Lumpur Mall’s share of the portfolio will decrease from 61.8% to 58.5%.
