Kuala Lumpur : Pavilion Real Estate Investment Trust (Pavilion REIT) has received unitholder approval to acquire two landmark hospitality assets, Banyan Tree Kuala Lumpur (BTKL) and Pavilion Hotel Kuala Lumpur (PHKL), in a RM480 million yield accretive transaction that strengthens the REIT’s long-term performance and reinforces its presence within Bukit Bintang.
The resolutions, passed earlier today at a unitholders’ meeting, enable MTrustee Berhad, acting on behalf of Pavilion REIT, to proceed with the acquisitions from Lumayan Indah Sdn Bhd and Harmoni Perkasa Sdn Bhd.
Dato’ Philip Ho, Chief Executive Officer of Pavilion REIT Management Sdn Bhd, said, “We are pleased with the strong support from our unitholders. These hotels are highly synergistic with Pavilion Kuala Lumpur Mall and Elite Pavilion Mall, allowing for an elevated visitor and hotel guest experience.”
Ho added that Pavilion REIT remains focused on owning and managing high-performing retail-led assets, especially super-regional and integrated developments, and this acquisition presents a value-aligned opportunity within the REIT’s existing footprint in Bukit Bintang, contributing to the overall vibrancy of the area while enhancing the REIT’s income resilience and growth prospects.
The two properties are 5-star hotels operated and managed by Banyan Tree Hotels & Resorts Pte Ltd, and have consistently achieved average occupancy rates of 82.1% (BTKL) and 81.5% (PHKL) for the financial year ended 31 December 2024.
BTKL, housed within a 59-storey integrated building, offers 55 well-appointed rooms, the award-winning Banyan Tree Spa and a rooftop bar. PHKL, which sits atop Pavilion Kuala Lumpur Mall, comprises 325 well-appointed rooms with comprehensive meeting and event facilities.
The acquisition will be funded through a combination of debt and or equity, including the issuance of up to 172.4 million new units to the vendors and or their nominees and a private placement of up to 386.0 million new units to raise between RM264 million and RM552 million.
Under the transaction structure, the hotels will be lease to Harmoni Perkasa Sdn Bhd, for an initial 10-year term with renewal options of up to 20 years. The lease guarantees a fixed annual rental of RM33.5 million for the first five years, reflecting a gross yield of approximately 7.0%. Rental escalations and variable components linked to the hotels’ performance offer further upside potential.
This structure offers both predictability and upside, with a variable component linked to the hotels’ performance over time.
Post-acquisition, the hotels will comprise approximately 5.5% of Pavilion REIT’s enlarged total asset under management, while Pavilion Kuala Lumpur Mall’s share of the portfolio will decrease from 61.8% to 58.5%.
Ho noted that Malaysia’s economy is well-positioned to navigate ongoing global trade concerns, supported by its growing role in regional supply chain diversification, a robust recovery in tourism and resilient domestic consumption.
Malaysia’s tourism sector is currently on a strong trajectory, with 2024 already surpassing pre-covid figures. Recent forecasts indicate international tourist arrivals are expected to reach 34.1 million in 2025 and 35.6 million in 2026, driven by the Visit Malaysia 2026 campaign, enhanced visa-free access from China and India and increasing air connectivity from key source markets.
While the acquisition enhances Pavilion REIT’s presence in Bukit Bintang, the REIT continues to benefit from the performance of its existing assets across the Klang Valley, notably Pavilion Bukit Jalil.
“Pavilion Bukit Jalil continues to be a key growth driver for the REIT. Its performance has been supported by rising occupancy levels, positive rental reversions and a vibrant, expanding tenant mix. We are also encouraged by the rapid growth of Bukit Jalil’s catchment area, which is attracting a rising residential and working population, further reinforcing the mall’s long-term upside potential,”
he said.
