KUALA LUMPUR: Sunway City Bhd (Suncity) and its subsidiaries are selling their interests in eight properties to Sunway REIT for RM3.73 billion, the developer said in a filing to Bursa Malaysia on May 10.
The eight properties are Sunway Pyramid Shopping Mall, Sunway Resort Hotel & Spa, Pyramid Tower Hotel, Menara Sunway, Sunway Carnival Shopping Mall, Sunway Hotel Seberang Jaya, Suncity Ipoh Supermarket and Sunway Tower.
The acquisition will be satisfied by the proposed issuance of 1.025 billion units in Sunway REIT and the balance of RM2.7 billion in cash, which is based on the market values of the properties appraised by Knight Frank, but subject to a price-adjustment mechanism.
This move was announced after a recent news report that the REIT will raise about RM1.5 billion, more than what was expected earlier this year.
The REIT, with a fund size of 2.78 billion units, is set to become the country’s largest when it is listed in the third or fourth quarter this year.
In addition, it proposed hotel master lease arrangements, which is a proposed lease by Sunway Resort Hotel Sdn Bhd of Sunway Resort Hotel & Spa and Pyramid Tower Hotel from the trust, as well as the proposed lease by Sunway Hotel (Seberang Jaya) Sdn Bhd of Sunway Hotel Seberang Jaya from the trust.
Suncity also proposed the issuance of redeemable preference shares in Sunway Pyramid Sdn Bhd (SPSB) to Reco Pyramid (M) Sdn Bhd. This exercise formalises the agreed position in respect of returns on the capital contribution of RM25.1 million made by Reco Pyramid in 2005 to part finance the now-completed development of phase 2 of Sunway Pyramid Shopping Mall.
“Suncity’s contribution for the development of phase 2 of Sunway Pyramid Shopping Mall is represented by the Suncity land, the value of which is RM41.774 million. The total cost incurred for phase 2 of Sunway Pyramid Shopping Mall was approximately RM464.6 million, which was funded by Reco Pyramid’s capital contribution of RM25.1 million, internally generated funds and bank borrowings.
“The proposed redeemable preference shares issuance is a non-voting instrument and does not attract any dividend. Further, it is only redeemable if there is sufficient cash flow in SPSB. Returns on the redeemable preference shares are only realised upon redemption, where a fixed-redemption premium of RM8.5 million shall be payable,” the developer said.