CapitaMalls Malaysia Trust buying Tropicana City Mall for RM540m
KUALA LUMPUR: CapitaMalls Malaysia Trust (CMMT) is buying the Tropicana City Mall with its office tower for a purchase consideration of RM540mil.
The trustee, AmTrustee Bhd, had on behalf of CMMT, signed a conditional sale and purchase agreement with Tropicana City Sdn Bhd to buy the property.
The property comprises of a four-storey shopping mall known as Tropicana City Mall and the four levels of car park comprising of 1,759 car park bays and a 12-storey office building known as Tropicana City office tower.
The retail mall has a net lettable area (NLA) of 448,248 sq ft. It started operations in December 2008 and the approximate age of the property is six years. The committed occupancy rate was 89.2% as at Jan 15, 2015.
The office tower has a NLA of 101,246 sq ft. It started operations in November 2009 and the age of the property is five years. The office tower is 100.0% occupied.
"The proposed acquisition will further strengthen CMMT's position as a sizeable, well geographically diversified shopping mall real estate investment trust in Malaysia.
"Following the completion of the proposed acquisition, CMMT's property asset value will increase by 16.7% from RM3.2bil to about RM3.8bil. This is expected to increase CMMT's visibility among Malaysian and international investors to support its future growth," it said.
CMMT intends to fund the proposed purchase through debt and/or equity fund raising, involving issuance of new units.
The risk factors from the acquisition were increased competition from other retail properties or between retailers and other office properties could have an adverse effect on CMMT‟s financial condition and results of operations.
It also said a decrease in the gross rental income, occupancy rate and the value of the property would have an adverse effect on CMMT‟s financial condition and results of operations;
It added CMMT will depend on external financing to finance the proposed acquisition and its ability to pay distributions may be adversely affected by this new loan agreement combined with CMMT's current financing arrangements and/or future loan agreements or any interest rates fluctuation;
CMMT said its current gearing, based on the latest audited financial statements as at Dec 31, 2013 was 28.8% and it would increase to 39.5% if the proposed acquisition was entirely funded via debt.
“Such gearing level may hamper CMMT’s ability to incur further borrowings and cause CMMT to become more vulnerable to interest rate increases,” it said.