KUALA LUMPUR (Sept 6): YTL Hospitality Real Estate Investment Trust (YTL Hospitality REIT) is acquiring Hotel Stripes Kuala Lumpur, Autograph Collection for RM138 million cash, in a related party transaction (RPT).
Maybank Trustees Bhd, as the trustee for the REIT, inked a conditional sale and purchase agreement with the vendor, Hotel 25 Sdn Bhd, on Wednesday to buy the property for RM138 million. This was announced by the manager of YTL Hospitality REIT, Pintar Projek Sdn Bhd.
Upon completion of the proposed acquisition, the hotel will be leased back to Hotel 25 for an initial term of 15 years, with an option granted to renew the lease for an additional 15 years. This move is a part of the REIT's investment strategy and portfolio expansion, according to YTL Hospitality REIT’s filing with Bursa Malaysia.
Hotel Stripes Kuala Lumpur, Autograph Collection is a five-star hotel, located along Jalan Kamunting in Kuala Lumpur. As at June 30, 2022, the audited net book value of the property stood at RM48.7 million.
The purchase consideration of RM138 million is expected to be funded by borrowings or internally generated funds, said YTL Hospitality REIT in the local bourse filing.
Hotel 25 (formerly known as Dynamic Property Management Sdn Bhd), which is principally engaged as a hotel operator, is an indirect wholly owned unit of YTL Corp Bhd.
On the rationale of the proposed acquisition, YTL Hospitality REIT said the exercise is in line with the group’s investment objective to continuously acquire and invest in high-quality hospitality properties in Malaysia and internationally, with a view to provide long-term and sustainable income distribution to unitholders, and achieve long-term growth in the net asset value per unit.
“The lease agreement will provide the REIT with fixed rental payments from the lessee, with a step-up provision of 5% for every five years. As such, the proposed lease is expected to contribute positively to future distributable income and distribution per unit of the REIT after taking into consideration, among others, the additional income received from the lease arrangement and estimated borrowing costs,” it said.
The proposals are deemed as an RPT, as YTL Corp is an indirect major shareholder of Pintar Projek by virtue of its major shareholding in YTL Land Sdn Bhd, the holding company of Pintar Projek. YTL Corp is also a major unitholder of YTL Hospitality REIT and an indirect major shareholder of Hotel 25.
The proposals are expected to be completed by the second half of this year.
YTL Hospitality REIT closed unchanged at RM1 on Wednesday, with a market capitalisation of RM1.7 billion.