KUALA LUMPUR (Dec 22): Dynasty Portfolio Sdn Bhd — an indirect subsidiary of UOA Development Bhd — has subscribed for new units under UOA Real Estate Investment Trust’s (UOA REIT) private placement for RM52.65 million or RM1.10 per unit.

The private placement aims to raise up to RM280 million, UOA Development said in a filing with Bursa Malaysia.

It said the RM1.10 issue price represents a discount of 12% to the five-day volume weighted average price of UOA REIT’s units up to Dec 17 of RM1.2502.

The consideration for the placement subscription will be wholly funded via internally generated funds, said UOA Development.

On risk factors, the group said the placement subscription will increase its inherent exposure to the risks faced by UOA REIT, such as loss of tenants and default by tenants, and competitive rental environment.

“As such, there is no assurance that we will continue to receive the same level of income distribution yields from UOA REIT in the future. In the event these risks could materially affect the financial and operating performance of our group, our board may undertake necessary measures to mitigate such risks,” said UOA Development.

On UOA REIT’s prospects, UOA Development said that despite the Covid-19 pandemic and imposition of Movement Control Order, there was no material adverse impact on the occupancy rate of UOA REIT’s properties as its property portfolio comprises purely commercial buildings where offices form a predominant portion with some supporting retail components.

“As at Sept 30, 2020, the buildings in UOA REIT’s property portfolio registered an average occupancy rate of approximately 90%. The acquisition of UOA Corporate Tower by RHB Trustees, on behalf of UOA REIT, is expected to substantially increase the asset size and the rental income of UOA REIT upon its completion,” the group said.

“Our Board of Directors, after considering the portfolio of the UOA REIT properties, its occupancy rate despite the Covid-19 pandemic, as well as the various stimulus packages announced by the government to support businesses, is optimistic that UOA REIT is expected to achieve a satisfactory performance for the financial year ending Dec 31, 2020,” said UOA Development.

Shares in UOA Development closed four sen or 2.29% lower at RM1.71, with a market capitalisation of RM3.63 billion. It saw some 712,500 shares changing hands.