Billy Toh / The Edge Financial Daily
September 08, 2017 09:34 am +08
KUALA LUMPUR: AmanahRaya Real Estate Investment Trust (REIT) is acquiring Vista Tower, a 63-storey office building, from The Intermark Sdn Bhd for RM455 million in cash.
The office tower with two concourse levels and three basement levels has a land area of 228,948 sq ft, according to a filing with Bursa Malaysia yesterday made by the REIT’s management company, AmanahRaya-Kenedix REIT Manager Sdn Bhd.
The building’s net lettable area is 551,875 sq ft, and the occupancy rate was 74.4% as of July 31 and could fall to 66.3% due to the non-renewal of one of the tenancy agreements upon expiry on Nov 30, said AmanahRaya-Kenedix.
It added that the purchase consideration was below the market value, estimated at about RM523 million, based on the investment method.
According to the filing, the proposed acquisition will elevate the ranking of AmanahRaya REIT to be among the top 10 REITs in Malaysia by total asset value (TAV), as its TAV will grow from RM1.03 billion to RM1.56 billion with the completion of the acquisition.
This, it added, will enhance the overall presence and reputation of AmanahRaya REIT in the Malaysian investment community.
AmanahRaya-Kenedix said the acquisition will also enable diversification and enlargement of the portfolio of assets under its management, which is expected to benefit AmanahRaya REIT in the long term as a result of economies of scale.
Earlier, Kenedix Asia Pte Ltd, a subsidiary in Singapore of Kenedix Inc, which is listed on the Japanese stock exchange, on Wednesday entered into a share sale agreement with MAL I (BVI) Ltd to acquire the entire issued share capital and the shareholder’s loan of MAL II (BVI) Ltd, which is the immediate holding company of The Intermark, from MAL I, for RM456.2 million.
Kenedix Asia owns 49% of AmanahRaya-Kenedix REIT Manager via its wholly-owned unit KDA Capital Malaysia Sdn Bhd, which is also a substantial unitholder of AmanahRaya REIT with a 15% stake.
The net acquisition by Kenedix Asia is about RM430 million after excluding the net current asset of MAL II.
In the Japanese stock exchange, Kenedix Inc said that the intention of the transaction was to temporarily hold Vista Tower before disposing of it to AmanahRaya REIT. Kenedix Asia will invest about RM160 million, with the remaining RM270 million to be obtained by debt financing from a financial institution in Malaysia.
AmanahRaya-Kenedix, in its Bursa filing, said the purchase consideration of RM455 million will be funded via a medium-term note programme with RM450 million notes issued and internally generated funds of RM5 million.
The addition of RM25 million includes transaction costs such as finance costs, legal, tax and accounting costs as well as due diligence costs to be incurred by Kenedix Asia.
AmanahRaya-Kenedix said there was no additional financial commitments from AmanahRaya REIT, except for the capital expenditure to be incurred in the course of its normal operations since Vista Tower is already established and fully operational.
Trading in the shares in AmanahRaya REIT has been suspended since Wednesday afternoon, and resumes today.
The sale of Vista Tower is the final component within The Intermark integrated development at Jalan Tun Razak to be sold by BlackRock Inc. The other components were Integra Tower which was sold to Kumpulan Wang Persaraan (Diperbadankan), Double Tree by Hilton to Royal Group and The Intermark Mall to Pavilion REIT. BlackRock raked in RM1.597 billion from the sales of DoubleTree by Hilton, The Intermark Mall and Integra Tower.
The life of the fund which holds the asset comes to an end this year. The sale will mark the exit of BlackRock from Malaysia.