An agreement has finally been inked to facilitate Pavilion Real Estate Investment Trust’s (Pavilion REIT) purchase of Pavilion Bukit Jalil mall (PBJ mall) from Malton Bhd.
Both groups have been in talks regarding the purchase since December last year. Malton’s executive chairman and major shareholder Tan Sri Desmond Lim is also the chairman and non-independent executive director of Pavilion REIT Management Sdn Bhd, the manager of Pavilion REIT.
MTrustee Bhd, the trustee of Pavilion REIT, on Tuesday (Nov 22) signed a sale and purchase agreement to acquire the mall from Malton’s subsidiary, Regal Path Sdn Bhd, for RM2.2 billion.
PBJ mall, located in Bukit Jalil, has a net lettable area of 1.8 million square feet. The mall houses five levels of retail space, two levels of basement parking with 4,800 car park bays and a piazza (centralised green area).
It is part of the 50-acre Bukit Jalil City integrated lifestyle development comprising three-storey shop offices and residences.
PBJ mall will increase Pavilion REIT’s assets to six, from the current line-up that comprises Pavilion Kuala Lumpur mall, Pavilion Tower, Intermark Mall, DA MEN Mall and Elite Pavilion Mall.
Pavilion REIT said the acquisition of PBJ mall is expected to contribute positively to its future growth, adding an additional 27% to the group’s enlarged total assets under management.
“Such positive spillover can be seen in Pavilion REIT’s nine-month profit after tax for 2022 of RM181.4 million (+153% year-on-year) and distribution per unit to Sept 30, 2022 of 6.16 sen, attributed to higher revenue rent, income from advertising and marketing events as well as lower property operating expenses,” said Pavilion REIT in a statement.
Meanwhile, Pavilion REIT Management has proposed to undertake a private placement exercise to raise up to RM1.27 billion, with the issue price to be determined later, through a book-building exercise.
The acquisition of PBJ mall is expected to be completed in the second quarter of 2023 whereas the proposed placement is expected to be implemented in tranches, said Pavilion REIT.
Datuk Philip Ho, the chief executive officer of Pavilion REIT Management, said the retail industry is expected to stay relatively resilient for the time being, even with the environment indicating risks of higher inflation.
“With retail sales growth expected to normalise, Pavilion REIT remains committed to bringing long-term growth and value for our stakeholders,” he said.
Additionally, Pavilion REIT said tourist arrivals are also expected to fully return to pre-pandemic levels by 2024 as more countries relax their respective Covid-19 prevention measures, including Malaysia.
Pavilion REIT’s units closed unchanged at RM1.20 on Tuesday with a market capitalisation of RM3.67 billion. Malton’s share price also closed unchanged at 39.5 sen, valuing the group at RM208.62 million.