UOA Development Bhd is selling UOA Corporate Tower in Bangsar South to 76.55%-owned UOA Real Estate Investment Trust (UOA REIT) for RM700 million (RM955 psf NLA).
UOA Corporate Tower, a 38-storey office building erected on a provisional parcel of property measuring 22,927 sq ft/0.53 acres, is being sold at a 2.5% or RM18 million discount. The building, whose net book value stood at RM586 million as at the close of the financial year ended Dec 31, 2019 (FY19), is being sold for a gain of RM114 million.
From the RM700 million proceeds, RM646 million or 92.9% will be used to fund the development of its properties, namely District K, Jalan Ipoh, Phase II of the UOA Business Park in Shah Alam, Lot 2507 in Kerinchi, Kuala Lumpur and V50, Bangsar South. The total estimated cost of these properties is RM1.36 billion. Another RM32.36 million would be used as working capital, and a further RM21.24 million would be used to pay the special dividend.
UOA REIT said it would be financing part of the purchase consideration via a private placement, which will raise RM278 million, and by securing RM352 million via its RM422 million five-year revolving credit facility. With regard to the private placement, UOA REIT said the placement units may be allocated to major unitholders and connected persons. The RM278 million in proceeds is based on an indicative issuance price of RM1.21 per unit for 229.8 million units, which is 54.3% of UOA REIT’s 422.87 million unit capital. Following the completion of the placement, UOA REIT’s unit capital would increase to 652.67 million units. Pro forma distribution per unit is expected to increase to 9.23 sen, from 9.11 sen as of FY19.
The acquisition of UOA Corporate Tower (which was completed in 2016) will lower the average building age of UOA REIT’s property portfolio from approximately 18 years as at Dec 31, 2019 to approximately 16 years. The manager believes that remaining a pure-play office REIT with a younger property portfolio would likely attract more investors’ interest in UOA REIT.
UOA REIT’s NLA, meanwhile, would increase to 2.07 million square feet after factoring in the 732,871 sq ft in NLA from the UOA Corporate Tower. UOA REIT would also realise a net unrealised gain of RM16.4 million from the purchase.
Postal address : UOA Corporate Tower, Avenue 10, The Vertical, Bangsar South City, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur
Strata title : Yet to be issued
Master title : Pajakan Negeri 46338, Lot 58190, Mukim and District of Kuala Lumpur, State of Wilayah Persekutuan Kuala Lumpur
Category of land use : Building
Express condition : Commercial building only
Tenure : Leasehold for a term of 99 years, expiring on 16 August 2106 (unexpired term of 86 years)
Market value : RM718 million (RM980 psf NLA) as appraised by the PA International Property Consultants Sdn Bhd as at the material date of valuation of 28 Sep 2020.
Age of building : Approximately 4 years from the original certificate of completion and compliance dated 16 November 2016
Master Land Area: About 111,400 square meters/27.52 acres
Gross floor area : 959,764 square feet
Net lettable area : 732,871 square feet
Percentage of occupancy: 93.09%
Vendor: Distinctive Acres Sdn. Bhd. & Paramount Properties Sdn. Bhd. (companies of UOA Development Bhd)
Purchaser: UOA Real Estate Investment Trust (UOA REIT)
Purchase Price: RM700 million (RM955 psf NLA)
Note: Gross Rental Income for the FYE2019 is RM44.4 million