AmanahRaya REIT to sell Holiday Villa Resort Hotel in Langkawi for RM145 mil

• AmanahRaya REIT, which is expected to record a gain of RM45 million, said the proposed disposal is in line with the trust’s growth strategy to unlock and realise higher returns on its investments at a favourable price.

KUALA LUMPUR (June 28): AmanahRaya Real Estate Investment Trust (REIT) is planning to dispose of Holiday Villa Beach Resort & Hotel Spa in Langkawi, Kedah for RM145 million, cash, to trim its borrowings.

AmanahRaya REIT, which is expected to record a gain of RM45 million, said the proposed disposal is in line with the trust’s growth strategy to unlock and realise higher returns on its investments at a favourable price, according to its filing on Wednesday (June 28).

Pacific Trustees Sdn Bhd, on behalf of AmanahRaya REIT, on Wednesday entered into a sale and purchase agreement with Plenitude Gateway Sdn Bhd, a wholly-owned unit of Plenitude Bhd to sell the 4-star beach resort hotel building with 238 rooms.

The trust bought the property for RM55 million in February 2007.

“The property is currently leased by Langkawi Holiday Villa Sdn Bhd (lessee) and is operated as a Holiday Villa brand and named Holiday Villa Beach Resort & Spa Langkawi. The existing lease term is 10 years commencing from July 13, 2016 expiring on July 12, 2026, with an option to renew the lease for a further 10 years commencing from the expiry of the lease.

“The lessee is also granted an option to purchase the property at a purchase price equivalent to the prevailing market value of the property at the time the option of purchase is exercised,” said the trust.

According to the trust, the disposal price was arrived at after taking into account the market value of RM104.74 million at end-December as appraised by the independent registered valuer Rahim & Co International Sdn Bhd.

Of the RM145 million gross proceeds, the REIT will use RM70 million for repayment of borrowings, RM45 million for lessee compensation sum, RM25 million for new investment and RM5 million for estimated expenses relating to the proposed disposal.

Post disposal, AmanahRaya REIT’s total borrowings will be reduced to RM566.14 million from RM636.14 million, while gearing will improve to 42.33 times from 45.04 times.

The exercise is slated to be completed by the first quarter of 2024.

Shares of AmanahRaya REIT closed up half a sen or 1.08% at 47 sen on Wednesday, translating into a market capitalisation of RM266.61 million.