PETALING JAYA: Sunway Real Estate Investment Trust (REIT) has proposed to acquire The Pinnacle Sunway from Sunway Bhd’s wholly-owned indirect subsidiaries Sunway Integrated Properties Sdn Bhd and Sunway Pinnacle Sdn Bhd for RM450 million cash and has proposed a private placement to raise up to RM710 million.
The proposed acquisition is in line with the key investment objective of the manager to continuously pursue an acquisition strategy to acquire and invest in properties that are able to contribute to the long-term growth in Sunway REIT’s dividend per unit (DPU) and/or net asset value per unit.
The proposed acquisition will provide quality addition of a Grade A office asset with reputable tenants to Sunway REIT’s portfolio; increase its property portfolio strength through further diversification, enhances scale and synergies within the Sunway City eco-system and is earnings and DPU accretive to unitholders.
Meanwhile, the proposed private placement to raise gross proceeds of up to RM710 million at an issue price to be determined later is to be undertaken under a new general mandate for the allotment and issuance of new units in Sunway REIT to be sought at its forthcoming AGM.
The manager intends to use 57% or RM405 million of the proceeds to fund the balance purchase consideration. 41.6% or RM295.3 million for the capital expenditure for expansion of Sunway Carnival Mall.
If the proposed acquisition is not completed, the earmarked proceeds to settle the balance purchase consideration will be reallocated to fund Sunway REIT’s acquisitions of other assets, and/or cost of development (including redevelopment) of Sunway REIT’s existing and future assets.
The proposed private placement will enable the manager to raise funds and channel them towards the proposed utilisation, which is expected to improve the earnings and the DPU to the unitholders when the benefits from the utilisation of proceeds from the exercise are realised.
The group also proposed a proposed establishment of a distribution reinvestment scheme (DRS) that provides unitholders with an option to elect to reinvest, in whole or in part, their cash income distribution in DRS units.
“The proposed DRS will potentially result in cash retention for Sunway REIT if the unitholders elect to reinvest their income distribution. The proposed DRS will provide the unitholders with an opportunity to enhance and maximise the value of their unitholdings in Sunway REIT by investing in DRS units at a discount,” it said.