KUALA LUMPUR: KIP Real Estate Investment Trust (KIP REIT), the first hybrid community-centric retail REIT listed on Bursa Malaysia Securities Bhd is buying Aeon Mall Kinta City Shopping Centre for RM208 million.
In a statement, KIP REIT said Kinta City Sdn Bhd had accepted an offer from the Pacific Trustees Bhd for the proposed acquisition of the freehold shopping mall.
The approximately 21-year-old building has a total lettable area of 530,181 square feet and is 100 per cent leased by a master tenant, AEON Co (M) Bhd.
It has an annual rental of RM16.31 million which translates to a gross yield of 7.8 per cent based on the purchase consideration of RM208 million.
The lease is for a period of 10 years from Sept 29, 2015 until Sept 28, 2025 with the option to renew the lease for an additional five years.
The long-term lease would provide a stable source of income for the fund. Furthermore, the lease has a rent escalation mechanism, KIP REIT said.
Given its strategic location and the increasing population in Ipoh, the property was expected to continue to provide stable returns even after the expiry of the master lease.
The acquisition would to be funded by bank borrowings and internally generated funds and barring any unforeseen circumstances would be completed in the first quarter of 2019, KIP REIT added.
Upon completion, KIP REIT’s total asset under management will increase from RM616.2 million, as at June 30, 2018, to RM827.1 million and the total net lettable area will increase from 936,000 square feet to approximately 1.47 million square feet.