OSK to inject UOA Pantai into property trust

STRATEGIC UOA: Pantai is located in Jalan Pantai Jaya in Kuala Lumpur

OSK Trustees Bhd plans to inject UOA Pantai into the UOA Real Estate Investment Trust (REIT) at a cost of RM86 million.

UOA Pantai, located in Jalan Pantai Jaya in Kuala Lumpur, is a five-storey office building with two mezzanine floors, on 0.36 hectare freehold land.

OSK Trustees will buy the property from Magna Tiara Development Sdn Bhd, a subsidiary of UOA Holdings Sdn Bhd.

The RM86 million price tag was decided on a willing-buyer willing-seller basis and is at a discount of 7.6 per cent from the market value of RM93.1 million.

The property was valued by Param & Associates (KL) Sdn Bhd.

UOA REIT told Bursa Malaysia Securities Bhd that Magna Tiara is negotiating with a few potential tenants, and the occupancy of the building is expected to reach 90 per cent within the next six months.

Units are expected to go at an average rental rate of between RM4.30 and RM4.50 per sq. ft, bringing in an estimated net earnings of RM4.5 million per annum after taking into account borrowing costs and other non-operating expenses.

Meanwhile, an unrealised gain on fair value adjustment of RM7.1 million together with a transaction cost estimated at RM1 million will be recognised in year 2008 upon completion of the acquisition.

"With the prime location, high tenancy rate and potential for growth in rental rates of UOA Pantai, the UOA Asset Management Sdn Bhd is of the view that the acquisition fits the investment objective of UOA REIT as well as its key objective for UOA REIT," UOA REIT told Bursa Malaysia yesterday.

UOA Asset Management is the manager of UOA REIT.

By New Straits Times