PETALING JAYA: Pavilion Real Estate Investment Trust (Pavilion REIT) unitholders have agreed to acquire the Pavilion Bukit Jalil Mall for RM2.2 billion.
In a statement today, the manager of Pavilion REIT, Pavilion REIT Management Sdn Bhd, said the endorsement by unitholders also saw the approval of two private placement exercises to partly fund the acquisition.
This involves a RM720 million tranche scheduled to be completed in the second quarter of this year, and a RM550 million tranche to be completed latest by the second quarter of 2025.
The issue price of the new units will be determined later by a book-building exercise while the remainder of the acquisition consideration will be funded by bank borrowings, the manager said.
Pavilion REIT’s gearing will rise from 33.8% as of Dec 31, 2022, to 36.8% on completion of both private placements.
This remains comfortably under the gearing limit of 50% as permitted under the listed REIT guidelines, which would still allow Pavilion REIT headroom to explore potential acquisitions, the statement said.
The manager said that post-private placement of both tranches, unitholders will see a dilution in the unit holdings of its major unitholders, which will “improve trading liquidity and benefit retail investors”.
Pavilion REIT Management CEO Philip Ho said the acquisition is 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 acquisition was first announced on Nov 22, 2022 with Pavilion REIT trustee MTrustee Bhd to acquire the mall and all related assets and rights from Regal Path Sdn Bhd, a wholly-owned subsidiary of Malton Bhd.
The acquisition is expected to raise Pavilion REIT’s portfolio base to RM8.3 billion from RM6 billion and provide future growth opportunities for the trust.
Pavilion REIT units closed at RM1.32 on Wednesday, valuing the REIT at RM4.04 billion.