Sunway REIT has proposed to acquire a portfolio of six freehold hypermarkets that are strategically located in Klang Valley and Johor for a total cash consideration of RM520 million from Kwasa Properties.
The group said the properties were 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. The malls are located in Kinrara Property, Putra Heights Property, USJ Property, Klang Property, Ulu Kelang Property and Plentong Property with a total land area of 56 acres.
Upon concluding the deal, Sunway REIT’s property value will increase to RM9.69 billion and is expected to increase its income stability through fixed rental payments from the Lessee under the triple-net lease agreements.
The combined weighted average lease expiry (“WALE”) of the Properties of 5.6 years will improve the WALE of Sunway REIT’s enlarged portfolio. Sunway said the properties are income-generating and are envisaged to contribute positively to the future earnings and distribution per unit (“DPU”) of Sunway REIT as well as being yield accretive to the
asset portfolio of Sunway REIT. The Properties 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 financial year ended 31 December 2022.
The group will fund the acquisition via its existing debt facilities which is targeted to be completed in the fourth quarter of 2023, subject to fulfillment of the conditions precedent under the SPA.