Commercial & Industrial Property News Update

Malaysia - Sunway REIT To Acquire First Healthcare Asset


October 12, 2012

Sunway Real Estate Investment Trust (Sunway REIT) will acquire Sunway Medical Centre (SunMed) for RM 310 million.


Sunway REIT is set to expand its portfolio to 12 properties with the addition of SunMed through an acquisition estimated to cost RM 310 million. The addition of the REIT's first healthcare asset would also help keep it among top local REITs in terms of assets.


SunMed was among the education or medical properties shortlisted for injection into the REIT, which in August announced that it was seeking four new assets from its sponsor Sunway Bhd.


The property is located in Sunway's 324 ha flagship Sunway Resort City in Bandar Sunway, and was determined to have a market value of RM 310 million by independent valuer Knight Frank, and a net book value of RM 161 million.


The seven-storey purpose-built hospital building has gross floor area of 762,319 sq ft, 324 beds, 12 operating theatres, 94 consultation suites and a convention centre with 500 seats.


Sunway REIT and SunMed have signed a master lease agreement which guarantees rent payment from SunMed for 10 years, with the option to renew for a further 10. The lease will generate rental revenue of RM 19 million in the first year of acquisition for Sunway REIT, increasing by 3.5% per annum for the subsequent nine years.


In a public filing, the trust said that it would fund the acquisition of SunMed's land and building through a mix of debt and/or equity, with the latter to be raised from a placement of new units of up to RM 320 million.


A bookbuilding exercise to be carried out by appointed placement agents RHB Investment Bank Bhd, Maybank Investment Bank Bhd, Credit Suisse (Singapore) Ltd and HSBC Ltd (Singapore) will determine the details of the equity placement at a later date.


Sunway REIT ceo Datuk Jeffrey Ng said that the bookbuilding exercise is expected to be completed by the end of the year, with both foreign and local institutional investors being potential placees.


The addition of SunMed will boost Sunway REIT's asset base to RM 4.9 billion from its current RM 4.7 billion, pushing the trust ahead of IGB REIT's RM 4.67 billion.

"Our business is model is quite simple: we grow via acquisitions. We are not going to do anything else other than look at what is in the market and continue to build up the portfolio," Ng said.

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