KUALA LUMPUR: CapitaMalls Malaysia Trust (CMMT) has entered into a conditional sale and purchase agreement to acquire East Coast mall in Kuantan, Pahang, priced at RM310 million.
In its announcement to Bursa Malaysia on Tuesday, June 14, CMMT noted that the total acquisition cost would come up to about RM330 million after factoring in the acquisition fee and expenses.
The mall has been independently valued at RM330 million. Its anchor tenants include Parkson, Carrefour and Golden Screen Cinemas.
The announcement added that the manager of CMMT — CapitaMalls Malaysia REIT Management Sdn Bhd (CMRM) — intends to fund the acquisition through a combination of debt and equity. The equity part of the funding would be raised via a proposed placement of up to 298.97 million new CMMT units to parties to be identified at a price to be determined by way of bookbuilding.
"The number of new units represents up to 20% of CMMT's existing 1,494,859,000 units, as authorised by unitholders at the unitholders' meeting on March 10," it noted.
The proposed acquisition and placement are expected to be completed by the fourth quarter of 2011.
"Based on CMMT's closing price of RM1.17 on Tuesday and loan-to-value ratio of 35%, this acquisition will benefit our unitholders as it will be yield-accretive. We intend to fund this acquisition partly through equity, which includes placing out new CMMT units. This placement will add to the number of CMMT units in circulation, increasing trading liquidity in our units. It will also enable CMMT to attract even more local and international institutional investors, enlarging our unitholder base," said Sharon Lim, CEO of CMRM.
The East Coast mall is 97% occupied and has a forecast property yield of 7.1% for 2011. The company noted that CMMT has a current estimated portfolio net property income (NPI) yield of 6.7% by end-2011 and implied NPI yield of 6.4%.
The four-storey shopping mall has one basement car park level and 1,170 parking lots, with a net lettable area (NLA) of more than 440,000 sq ft. As such, the addition of the mall would increase the REIT's NLA to 2.4 million sq ft from two million sq ft. Valuation of its portfolio of malls will increase to RM2.7 billion from RM2.4 billion.
CMMT expects the East Coast mall to contribute NPI of RM22 million for 2011. With that, the combined 2011 NPI forecast of CMMT's portfolio is RM163.6 million. For its financial year ended Dec 31, CMMT had an NPI of RM65 million.
"With East Coast mall strategically located in the heart of Kuantan city centre and part of the Putra Square development, this proposed acquisition provides CMMT the opportunity to penetrate into the retail sector in the East Coast of Peninsular Malaysia. It will enhance CMMT's income and geographical diversifications, and further strengthen CMMT's position as the largest ‘pure-play' shopping mall REIT in Malaysia," said Kee Teck Koon, chairman of CMRM.
The other properties the REIT has in its portfolio are Gurney Plaza in Penang, Sungai Wang Plaza in Kuala Lumpur and The Mines in Selangor.
CMMT was listed on the Main Market on July 16, 2010. It is the country's largest "pure-play" shopping mall REIT by market capitalisation and property value. CMMT's market capitalisation stood at RM1.7 billion.
CMRM is a joint venture between CapitaMalls Asia and Malaysian Industrial Development Finance Bhd.