Sunway Real Estate Investment Trust Bhd (Sunway REIT) is buying six hypermarkets in Klang Valley and Johor for RM520 million.

It told the stock exchange today that it has entered into a conditional sale and purchase agreement with Kwasa Properties Sdn Bhd, a wholly-owned subsidiary of the Employees Provident Fund.

The Klang Valley properties are in Kinrara, Putra Heights, USJ, Klang and Ulu Klang, while the property in Johor is located in Plentong.

Upon completion of the proposed acquisition, Sunway REIT’s property value will increase to RM9.69 billion from RM9.10 billion as at December 31, 2022. 

It said that the properties are income-generating and are to contribute positively to the future earnings and distribution per unit of Sunway REIT as well as being yield accretive to its asset portfolio.

“The properties are expected to generate an indicative net property income (NPI) yield of approximately 8% based on the purchase consideration, in comparison to Sunway REIT’s portfolio NPI yield of 5.4% for the financial year ended December 31, 2022,” it said.

Sunway REIT will fully fund the acquisition via its existing debt facilities and is targeted to be completed in the fourth quarter of 2023.

“This proposed acquisition fortifies our efforts towards achieving TRANSCEND 2027 property value target of RM14-15 billion by 2027 and our plan to be the real estate proxy for Malaysia. Moving forward, we will continue to look out for investment opportunities across Malaysia,” Sunway REIT Management CEO Datuk Jeffrey Ng said in a press release.

He said the properties are 100% leased to a reputable hypermarket operator on triple-net master lease arrangements, providing Sunway REIT with a stable income stream which is less susceptible to the effects of economic downturns.

“These well-located properties, supported by Sunway Group’s brand name, expertise and experience in mall management, will contribute to the long-term growth in Sunway REIT’s net asset value per unit,” he added.

Additionally, he said the group is committed to collaborating closely with the Sunway Malls management team to identify potential asset enhancement opportunities in the medium term, as well as to explore property development opportunities over the longer term for the properties.

“The proposed acquisition reinforces our position as the second largest listed REIT in Malaysia, measured by property value,” Ng said. – TMR