PETALING JAYA, 17 March 2023:
Already the second largest real estate investment trust (REIT) in Malaysia, Sunway REIT Management Sdn Bhd has added six freehold hypermarkets located in the Klang Valley and Johor to its portfolio.
The RM520 million all-cash purchase will boost Sunway REIT’s value to RM9.69 billion upon the deal’s completion and represents an opportunistic investment, the firm said in a statement yesterday.
The acquisition will be fully funded by Sunway REIT’s existing debt facilities and is targeted to be completed in the fourth quarter of 2023, subject to fulfilment of the conditions precedent.
The properties – all fully leased by GCH Retail (Malaysia) Sdn Bhd – were acquired from Kwasa Properties Sdn Bhd, a wholly-owned subsidiary of the Employees Provident Fund (EPF). They are:
- Kinrara Property,
- Putra Heights Property,
- USJ Property,
- Klang Property,
- Ulu Kelang Property,
- Plentong Property.
Sunway REIT noted these properties are strategically located in densely populated and matured residential areas in Klang Valley and Johor, surrounded by high-population catchments and provide non-discretionary products and services to the local mass-market.
As income-generating properties, these are expected to generate an indicative net property income (NPI) yield of approximately 8% based on the purchase consideration, in comparison to Sunway REIT’s portfolio NPI yield of 5.4% for the year ended 31 Dec 2022.
“The proposed acquisition is expected to increase income stability of Sunway REIT through fixed rental payments from the Lessee under the triple-net lease agreements.”
Chief executive officer Datuk Jeffrey Ng said: “These properties provide non-discretionary products and services which have demonstrated high resilience and encountered minimal disruption during the pandemic…providing Sunway REIT with stable income stream which is less susceptible to the effects of economic downturns.”
Reiterating the REIT’s aim to have around RM14-15 billion worth of assets by 2027, he added: “We are committed to collaborating closely with the Sunway Malls Management Team to identify potential asset enhancement opportunities in the medium term, as well as to explore property development opportunities over the longer term.”