KIP REIT to acquire RM118m worth of suburban retail assets, boosting portfolio to RM1.5b

• The four properties are KIPMall Desa Coalfields in Kuala Selangor at RM62 million, the Lotus’s Indera Mahkota hypermarket in Kuantan at RM39 million, along with three units of double-storey shop offices worth RM12 million, and a double-storey commercial building worth RM5 million, also located in Kuantan.

KUALA LUMPUR (April 9): KIP Real Estate Investment Trust (KL:KIPREIT) is acquiring four retail properties worth RM118 million in Kuala Selangor and Kuantan, Pahang, marking a strategic suburban expansion.

The acquisitions are expected to increase its property portfolio to RM1.5 billion, moving closer to its target of achieving RM2 billion in assets under management by 2027.

The four properties are KIPMall Desa Coalfields in Kuala Selangor at RM62 million, the Lotus’s Indera Mahkota hypermarket in Kuantan at RM39 million, along with three units of double-storey shop offices worth RM12 million, and a double-storey commercial building worth RM5 million, also located in Kuantan.

The proposed acquisitions are deemed related party transactions as Datuk Ong Kook Liong, the managing director and a major shareholder of KIP REIT Management Sdn Bhd, is also a director and a major shareholder of the owners of the properties.

MainStreet Advisers Sdn Bhd has been appointed as the independent adviser to provide advice to non-interested unitholders of KIP REIT on the proposed acquisitions.

The acquisitions will be partly funded by a proposed placement of up to 160 million new units, representing about 20% of KIP REIT’s existing issued units.

About RM106.2 million of the RM132 million raised will be used as partial settlement of the purchase considerations. Another RM21.87 million will be for asset enhancement initiatives of KIPMall Tampoi in Johor.

The remaining RM3.93 million is earmarked for estimated expenses related to the fundraising exercise.

KIP REIT chief executive officer Valerie Ong Pui Shan said the investments are designed to deepen the trust’s presence in rapidly growing suburban markets, focusing on community-centric neighbourhood malls.

"The strong tenancy mix and long-term lease structures will strengthen the stability of our rental income," Ong said in a statement on Wednesday.

"We focus on community-centric neighbourhood malls, which are inherently resilient as our tenants predominantly serve the mass market with affordable, daily essentials. This positions us well to weather economic cycles while maintaining high occupancy," she added.

KIPMall Desa Coalfields, a freehold retail centre featuring rooftop solar photovoltaic panels, boasts a 99% occupancy rate and hosts a diversified tenant base, including food and beverage outlets, fashion, services, and a supermarket anchor.

Lotus’s Indera Mahkota is a leasehold single-storey hypermarket, fully occupied by Lotus’s Stores (Malaysia) Sdn Bhd under a long-term lease arrangement.

Meanwhile, the three units of double-storey shop offices are positioned to benefit from the local neighbourhood traffic, while the double-storey commercial building is 100% occupied by a drive-thru KFC outlet.

Upon completion, the new acquisitions will expand KIP REIT's net lettable area by about 12% to 2.85 million sq ft.

KIP REIT currently owns 14 properties, comprising industrial properties, retail properties and KIPMalls, with a total net lettable area exceeding 2.54 million sq ft and total property valuation of about RM1.4 billion.

At the noon market break on Wednesday, KIP REIT's units were down two sen or 2.34% at 83.5 sen, with a market capitalisation of RM666.9 million.

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