“Pavilion REIT announces plans to acquire Banyan Tree KL and Pavilion Hotel KL for RM480 million. The acquisitions aim to diversify its portfolio and will be financed through a private placement of up to RM552 million.“
Kuala Lumpur, 06th Dec 2024, 2.22pm – Pavilion Real Estate Investment Trust (Pavilion REIT) has announced plans to acquire Banyan Tree Kuala Lumpur and Pavilion Hotel Kuala Lumpur for a total of RM480 million. To finance the acquisitions, the REIT is proposing a private placement to raise up to RM552 million.
The acquisitions, considered related-party transactions, involve Pavilion REIT purchasing Banyan Tree KL for RM140 million from Lumayan Indah Sdn Bhd and Pavilion Hotel KL for RM340 million from Harmoni Perkasa Sdn Bhd. Both companies are indirectly owned by Pavilion REIT’s major unitholder, Tan Sri Lim Siew Choon, who also chairs the REIT’s management company.
Pavilion REIT said the move aligns with its strategy to enhance its portfolio while leveraging synergies with Pavilion KL mall. The acquisitions will reduce Pavilion KL mall’s contribution to the REIT’s total asset value from 61.4% to 58%, diversifying its portfolio.
Both hotels will be leased to Harmoni Perkasa under 10-year agreements, generating fixed annual rental income starting at RM33.5 million, with an estimated gross yield of 7.0%. The rental will be adjusted every five years.
To fund the acquisitions, Pavilion REIT plans to issue up to 386.01 million new units through a private placement, priced at an illustrative RM1.43 per unit, raising up to RM552 million. From the proceeds, RM446.5 million will go towards funding the acquisitions, RM80 million for debt repayment, and RM25.5 million for related expenses. Any remaining purchase amount will be covered by borrowings or by issuing consideration units to the vendors.
The acquisitions and financing exercises are expected to be completed in the first half of 2025. Independent adviser Inter-Pacific Securities Sdn Bhd has been appointed to guide non-interested unitholders.
Pavilion REIT units closed higher at RM1.51, reflecting a 1.34% increase, bringing its market capitalisation to RM5.53 billion.
