KUALA LUMPUR (Nov 29): IGB Commercial Real Estate Investment Trust (IGB Commercial REIT) (KL:IGBCR) is buying two office floors in Menara Southpoint of Mid Valley City from its sponsor and parent company, IGB Bhd (KL:IGB), for RM62.4 million cash. IGB holds 53.84% in IGB Commercial REIT.
The REIT’s trustee, MTrustee Bhd, has inked a sale and purchase agreement for the transaction with Mid Valley City Southpoint Sdn Bhd (MVCSP), an indirect wholly owned unit of IGB, according to filings from both IGB Commercial REIT and IGB.
The property comprises two office-suite parcels within Menara Southpoint in Mid Valley City, Kuala Lumpur. It is currently leased to a single tenant, with its tenancy expiring on March 31, 2030. The tenancy will be transferred to IGB Commercial REIT, together with the ownership of the property, on completion of the purchase.
MVCSP originally acquired the properties on July 6, 2018, for RM45.54 million. Their net book value stood at RM45.46 million as of the end-December 2023.
IGB Commercial REIT has a right of first refusal from its sponsor IGB to acquire its properties used primarily for commercial purposes. The REIT said the transaction is in line with its investment objectives and growth strategy to provide its unitholders with stable income distribution and to achieve growth in its net asset value (NAV) per unit.
“The proposed acquisition of the property will be accretive to IGB Commercial REIT’s distributable income from the additional two floors of tenanted commercial space, being the remaining two office floors to complete Southpoint Offices & Retail that will benefit IGB Commercial REIT in the long term,” the REIT’s filing read.
IGB, meanwhile, said the disposal is expected to generate an estimated gain of RM16.9 million for MVCSP, although it will not be reflected at IGB’s group level.
IGB plans to use net proceeds from the disposal for general working capital, project financing, and repayment of bank borrowings.
The transaction is anticipated to be completed by the first quarter of 2025, it said.
Shares in IGB closed six sen or 2.23% lower at RM2.63 on Friday, valuing the group at RM3.57 billion. IGB Commercial REIT dipped half a sen to 53 sen, for a market capitalisation of RM1.27 billion.
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Source: EdgeProp.my
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