MTRUSTEE Berhad, the trustee of CapitaLand Malaysia Trust (CLMT), has entered into an agreement to sell the 3 Damansara Office Tower property to Lagenda Harta for a total price of RM52 million (S$15.2 million).

Lagenda Harta is a unit of Lagenda Properties Berhad. 

In an announcement to the Singapore Exchange on Tuesday (Sep 5), the trust’s manager – CapitaLand Malaysia Reit Management – said the sale consideration represents a 4 per cent premium to the property’s most recent independent valuation of RM50 million as at Jul 31. 

Tan Choon Siang, chief executive of CapitaLand Malaysia Reit Management, said the maiden divestment is in line with the trust’s ongoing portfolio reconstitution strategy.

“We have decided to monetise this non-core office asset to improve the quality of our portfolio,” he said. 

Tan added that he expects the proposed divestment to strengthen the trust’s balance sheet. 

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“The proceeds from this divestment will provide us with financial flexibility to enhance our portfolio diversification efforts and pursue higher-yielding opportunities in the new economy sectors,” he said. 

The property that is being sold is part of the 3 Damansara Property integrated development that was acquired by CLMT in 2015.

The net proceeds after divestment costs amount to about RM50.5 million, and will be used to repay existing borrowings. 

If the net proceeds were used to repay CLMT’s borrowings as at end-June this year, CLMT’s gearing ratio would have fallen to 43.5 per cent from 44.1 per cent. 

The trust said the net proceeds from the proposed disposal, after deducting all fees and expenses related to the sale, are expected to be utilised within 12 months from the completion date. 

The expected net gain on the proposed disposal is approximately RM0.4 million, and will have no material impact on the earnings of CLMT for the fiscal year ending Dec 31, the trust added.

The deal is expected to complete by Q1 2024. Upon completion, CLMT will own eight properties in Malaysia, comprising six retail and two logistics properties located across three key urban centres in Penang, Klang Valley and Pahang.

The transaction is not expected to have any material impact on the trust’s net asset value and distribution per unit for the current financial year.