Pavilion Real Estate Investment Trust (Pavilion REIT) has announced the proposed acquisitions of two prestigious hospitality assets in Kuala Lumpur, the Banyan Tree Kuala Lumpur (BTKL) and Pavilion Hotel Kuala Lumpur (PHKL), in a landmark deal worth RM480 million.👀
MTrustee Berhad, acting for and on behalf of Pavilion REIT, entered into conditional sale and purchase agreements with Lumayan Indah Sdn Bhd for the acquisition of BTKL at a purchase consideration of RM140 million, and with Harmoni Perkasa Sdn Bhd for the acquisition of PHKL at a purchase consideration of RM340 million.
The deals are deemed related-party transactions as both Lumayan and Harmoni Perkasa are indirectly wholly-owned by Pavilion REIT major unitholder Tan Sri Lim Siew Choon.
Both properties are located in the bustling Bukit Bintang area, at the heart of Kuala Lumpur’s Golden Triangle.
Banyan Tree Kuala Lumpur (BTKL)
- seamlessly connected to Pavilion Kuala Lumpur Mall
- operated and managed by Banyan Tree Hotels & Resorts Pte Ltd since opening in 2018
- award winning five-star hotel within a 59-storey integrated building, features 55 premium suites, a rooftop bar, and the renowned Banyan Tree Spa
- consistently achieved average occupancy rates of 83.0% respectively up to 30 September 2024
- Visit BTKL website here
- Famous because of the RM460 burger? (Story here 😂)
Pavilion Hotel Kuala Lumpur (PHKL)
- located above Pavilion Kuala Lumpur Mall
- operated and managed by Banyan Tree Hotels & Resorts Pte Ltd since opening in 2018
- offers 325 well-appointed rooms and extensive event and dining facilities
- consistently achieved average occupancy rates of 82.2% respectively up to 30 September 2024
- Visit PHKL website here
As part of the deal, the hotels will be leased back to the current operator for an initial 10-year term, with the option to renew for up to 20 additional years.
The fixed annual rental income will commence at RM33.5 million for the first 5 years, generating an approximate annual gross yield of 7.0%. This rental income will be subject to incremental adjustments every 5 years.
Funding of the Deals
The acquisitions will be funded via a combination of debt and/or equity, with Pavilion REIT proposing a private placement of new units to raise gross proceeds between RM264 million and RM552 million.
Alternatively, it may issue up to RM246.5 million worth of units to settle part of the purchase consideration.
The transaction is expected to enhance portfolio diversification by reducing Pavilion Kuala Lumpur Mall’s contribution to Pavilion REIT’s total asset value from 61.4% to 58.0% via exposure to the hospitality sector.
Meaning, upon completion, the hotels will represent 5.5% of Pavilion REIT’s enlarged total assets under management, further solidifying its position as a dominant player in Malaysia’s real estate investment trust industry.
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About Pavilion REIT
Listed on 7 December 2011, with the largest exposure to the retail sector by any listed Malaysian real estate investment trust, Pavilion REIT owns a RM8.4 billion portfolio based on appraised value, to which its most prominent asset is Pavilion Kuala Lumpur Mall that is located in Bukit Bintang, Kuala Lumpur, Malaysia.
Pavilion REIT is established with the principal investment policy of investing, directly and indirectly, in a diversified portfolio of income-producing real estate used solely or predominantly for retail purposes (including mixed – use developments with a retail component) in Malaysia and other countries within the Asia-Pacific region.
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