<article><a href="http://www.tower-reit.com.my" target="_blank">Tower Real Estate Investment Trust (REIT) </a>has disposed of 19 office parcels and 190 car park bays within Menara ING for MYR132.34 million ($37.8 million) cash, expected to provide a gain of MYR40.4 million ($11.5 million) for the trust.</article>

<a href="http://www.tower-reit.com.my" target="_blank">Tower Real Estate Investment Trust (REIT) </a>has disposed of 19 office parcels and 190 car park bays within Menara ING for MYR132.34 million ($37.8 million) cash, expected to provide a gain of MYR40.4 million ($11.5 million) for the trust.
In a filing with Bursa Malaysia, Tower REIT said the proposed disposal “will have a favourable impact on the net gearing of the trust. Based on the net asset value (NAV) per unit of Tower REIT as at Sept 30, 2014 of RM 1,7948, the proposed disposal is expected to result in an increase in the NAV per unit by 5 per cent”.
As at Sept 30, Tower REIT’s NAV per unit stands at MYR 1.79.
Tower REIT is currently trading sharply below its NAV. The stock has fallen by 29 sen or 19.33 per cent year-to-date to close unchanged at MYR 1.21  giving it a market capitalisation of RM339.4 million.
The proceeds, it said, will contribute positively to the trust’s earnings for the financial year ending December 31, 2015.
Of the MYR40.4 million realised gain, MYR15.04 million was recognised as fair value gains in the prior years.
Tower REIT signed a sale and purchase agreement (SPA) with Goldstone Kuala Lumpur Sdn Bhd, under which Goldstone will first pay 10 per cent deposit or MYR13.23 million with the balance to be settled within three months from the date of the SPA.
The disposed property has a net lettable area of 160,413 sq ft and a net book value of MYR101.5 million as at December 31, 2013.
Proceeds from the disposal will be used to repay bank borrowings and will enable <a href="http://http://www.guocoland.com.my/property/page.aspx?id=56" target="_blank">GLM REIT Management Sdn Bhd</a>, which manages Tower REIT, to pursue acquisition opportunities to grow the trust.
Besides Menara ING in Jalan Raja Chulan, Tower REIT also manages two other commercial properties: Menara HLA in Jalan Kia Peng and HP Towers in Bukit Damansara here in Kuala Lumpur.
As at Sept 30, Tower REIT’s total portfolio was valued at MYR642.5 million in which Menara HLA accounts for 51 per cent of the group’s total real estate portfolio, followed by HP Towers (33 per cent) and Menara ING (16 per cent).
<a href="http://www.tower-reit.com.my" target="_blank">Tower REIT’s</a> earnings has been dwindling since 2012 (FY12), which it said was due to intensified competition that has caused additional pressure on its rental and occupancy rates.
Tower REIT’s occupancy rates in Menara HLA dropped to 74 per cent last year from 99 per cent in FY12. Similarly, the occupancy rates in Menara ING and HP Towers dipped to 94% and 77 per cent last year from 100 per cent and 80 per cent in FY12 respectively.
For the nine months to Sept 30, 2014, the group’s net profit plunged 51 per cent to MYR16.48 million or 5.88 sen per share from MYR24.83 million or 8.85 sen per share, due to lower occupancy rates in Menara ING and Menara HLA.
Revenue dropped 19 per cent to MYR33.99 million from MYR40.47 million in the same period last year on higher operating expenditures, mainly due to higher assessment and tariff hikes.

Tower REIT disposes assets for $38m

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Tower REIT disposes assets for $38m

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