PAVILION Real Estate Investment Trust (Pavilion REIT) expects to complete the acquisition of Elite Pavilion Mall this year, says Pavilion REIT Management Sdn Bhd chief officer Philip Ho.
Elite Pavilion Mall, an extension to Pavilion Kuala Lumpur Mall, opened its doors in late 2016.
The 10-storey mall with a net lettable area of 229,609 sq ft has over 70 brands with flagship stores such as Coach, Huawei, LEGO, MUJI and JD Sports, and King of Trainers.
The trust manager, Pavilion REIT Management Sdn Bhd, is buying the mall with related assets and rights for RM580 million cash from Urusharta Cemerlang (KL) Sdn Bhd (UCKL).
The acquisition is in line with Pavilion REIT’s strategy of acquiring yield-accretive income producing properties.
UCKL is owned by Pavilion REIT Management chairman and executive director Tan Sri Lim Siew Choon and Qatar Holdings LLC holding 51 and 49 per cent stake, respectively.
Pavilion REIT Management is managing RM5.7 billion worth of assets as at December last year.
Ho told NST Property the REIT market outlook this year was expected to be challenging due to poor consumer sentiment.
He said besides completing the Elite Pavilion Mall acquisition, Pavilion REIT would continue to evaluate potential properties and recommend to the board if it was yield-accretive.
Pavilion REIT, which owns Pavilion Kuala Lumpur Mall, Intermark Mall, DA MEN Mall and Pavillion Tower, said a revaluation exercise during the financial year ended December 31 2017 resulted in a surplus of RM17 million.
Meanwhile, Knight Frank Malaysia said established REITs continued to see opportunities in the crowded retail segment as many of their well-managed malls still maintained high occupancy levels of 85 per cent.
Investment activities in Kuala Lumpur are expected to remain stable this year, it added.
“The retail sub-sector is slightly more robust despite the supply glut as established fund/REIT managers are still achieving strong performance from their retail properties,” said Knight Frank Malaysia.