Pavilion REIT, has announced that its non-interested unitholders have agreed to the acquisition of Pavilion Bukit Jalil Mall which would elevate the REIT manager as a prominent player in the country.
The acquisition will see MTrustee Berhad, as the trustee of Pavilion REIT, acquiring PBJ Mall and all related assets and rights from Regal Path Sdn Bhd, a wholly-owned subsidiary of Malton Bhd, for RM2.2 billion. The acquisition is expected to increase the portfolio base of Pavilion REIT to RM 8.3 billion from RM 6 billion and provide future growth opportunities for the trust.
According to the REIT’s filing with Bursa Malaysia on Wednesday (March 22), this endorsement by unitholders also saw the approval of two private placement exercises to partly fund the acquisition, spread between the first tranche of RM 720 million, scheduled to be completed in second quarter of this year and a second tranche of RM 550 million, to be completed latest by the second quarter of 2025. The issue price for new units will also be determined later by way of a book-building exercise whilst the remainder of the acquisition consideration will be funded by bank borrowings.
Gearing for Pavilion REIT will increase from 33.8% as at 31 December 2022 to 36.8% upon completion of both tranches of the placements. This remains comfortably under the gearing limit of 50.0% as permitted under the listed REIT guidelines which would still allow Pavilion REIT head-room to explore potential acquisitions.
In addition, post-private placement of both tranches, unitholders will see a dilution in the unitholdings of its major unitholders which will improve trading liquidity and benefit retail investors.
Units of Pavilion REIT closed RM 1.32 on Wednesday, valuing the REIT at RM 4.04 billion.
