Sunway REIT confirms in talks to buy retail assets from EPF, to ink agreement 'as soon as possible'

• The latest filing came after the REIT suspended the trading of its units for an hour on Monday morning, from 9am to 10am.

KUALA LUMPUR (March 14): The manager of Sunway Real Estate Investment Trust (Sunway REIT) has confirmed that it is in talks to buy retail assets from the Employees Provident Fund (EPF), saying negotiation of terms are still in progress.

While it cannot confirm the terms of the agreement as talks are still ongoing, the REIT said in a filing on Monday that it expects to — subject to agreement of terms and the board's final approval — enter into an agreement with the EPF "as soon as possible but we are unable to confirm the timing at this juncture due to ongoing negotiations".

It was responding to a query from Bursa Malaysia Securities Bhd over an article by The Edge Malaysia, which wrote that Sunway REIT is expected to sign a deal to buy six retail assets worth a combined RM500 million from the EPF. Citing sources, the weekly said that the parties might be inking a deal as early as this week.

The latest filing came after the REIT suspended the trading of its units for an hour on Monday morning, from 9am to 10am. Its units closed one sen or 0.65% higher at RM1.55, giving the trust a market capitalisation of RM5.31 billion.

In announcing the trading suspension earlier, the REIT pointed to its Sunday filing, in which it clarified that its trustee had yet to reach a definitive agreement to buy the retail assets — which are currently leased to grocery store retailer Giant — from the EPF.

"The board of directors of Sunway REIT Management Sdn Bhd, the manager for Sunway REIT, wishes to clarify that RHB Trustees Bhd, as the trustee of Sunway REIT, has not reached a definitive agreement at this juncture. The board of directors of the manager is committed to making the necessary disclosures via Bursa Malaysia Securities Bhd when there are material developments in due course," Sunway REIT said in its Sunday filing.

The Edge reported in its publication for the week of March 13-19 that the REIT is in the midst of a deal to buy the retail assets from the EPF, and that five of the stores are in Klang Valley, while one is in Johor.

The stores in Klang Valley are: Giant Superstore Ulu Klang, Giant Hypermarket Bandar Kinrara, Giant Hypermarket Putra Heights, Giant Hypermarket Klang and Giant Hypermarket Subang Jaya, USJ, which is adjacent to Mydin in USJ and has ceased operations late last year. The store in Johor is Giant Hypermarket Plentong.

While details of the deal remain sketchy, a REIT expert told The Edge that the purchase by Sunway REIT appeared to be a sound real estate plan, as the assets are well located and valuations are expected to rise in the long term. "Also, because of Sunway REIT's skill sets in operating malls, they can always enhance the assets and increase revenue too," the expert who declined to be named was quoted as saying.

Sunway REIT's total asset value stood at RM9.4 billion as at Dec 31, 2022. On Dec 29, it inked an agreement to sell the Sunway Medical Centre (Towers A and B) for RM430 million to Sunway Bhd. Excluding this medical centre — whose disposal is expected to be completed in the first half of this year — the REIT owns five retail malls, six hotels, five offices, two industrial properties and one educational asset.