KUALA LUMPUR (Sept 18): WCT Holdings Bhd (KL:WCT) has proposed to dispose of three retail properties for RM2.44 billion to a newly established real estate investment trust (REIT) named Paradigm REIT, which will be listed on the Main Market of Bursa Malaysia.
This is going to be the second REIT to be controlled by billionaire tycoon Tan Sri Desmond Lim Siew Choon, after Pavilion REIT. Lim is the largest shareholder of WCT with a total 25.57% stake, and the second largest unitholder of Pavilion REIT with 23.09% ownership, after Qatar Investment Authority.
In a bourse filing, WCT stated that the three properties are Bukit Tinggi Shopping Centre, to be sold by Gemilang Waras Sdn Bhd (GWSB), an indirect wholly owned subsidiary of WCT; Paradigm Mall Petaling Jaya, to be sold by Jelas Puri Sdn Bhd (JPSB), a 70% joint venture of WCT; and Paradigm Mall Johor Bahru, to be sold by WCT Hartanah Jaya Sdn Bhd (WCTHJ), another indirect wholly owned subsidiary of WCT.
The proposed disposal will be executed through sale and purchase agreements with RHB Trustees Bhd, acting on behalf of Paradigm REIT, subject to approval from the Securities Commission (SC).
Paradigm REIT will fund the disposal by issuing 1.6 billion new units at an assumed price of RM1 per unit, along with a cash payment of RM837 million. The cash will be raised through medium-term notes issued by a special purpose vehicle.
Of the new units, 350 million will be issued to GWSB, 230 million to JPSB, and the remainder to WCTHJ.
WCTHJ will then offer 560 million units, up to 35% of the total, with 254.66 million units for retail and over 305.34 million units for institutional offerings, with the issue price to be determined later.
WCT had previously announced plans in July to establish a REIT to unlock the value of its property investments. The proceeds from the REIT listing will be used to reduce borrowings and capitalise on strategic business opportunities.
In the latest filing, WCT stated that Paradigm REIT will be constituted by a deed of trust, with Paradigm REIT Management Sdn Bhd, formerly WCT REIT Management Sdn Bhd, proposed as the management company. Henry Butcher Malaysia (Mont'Kiara) Sdn Bhd is proposed as the property manager.
The total issued fund size upon Paradigm REIT's listing will be 1.6 billion units, expected to raise approximately RM1.4 billion. Of this, 60% will be used to repay WCT's borrowings and 38% to repay borrowings of GWSB and WCTHJ.
The proposed REIT establishment, disposal, offering, and listing require approvals from the relevant authorities, including the SC and Bursa Malaysia. An extraordinary general meeting will be convened to obtain shareholder approval.
WCT expects to submit applications to the relevant authorities within two months and aims to complete all proposals by the first quarter of 2025, barring unforeseen circumstances.
Shares of WCT settled three sen or 2.83% lower at RM1.03 on Wednesday, valuing the company at RM1.54 billion.