FRASERS Logistics & Industrial Trust (FLT) is acquiring a new industrial facility in Sydney for A$58.2 million from Frasers Property Australia (FPA), the Australian business unit of Frasers Centrepoint Limited (FCL).
On Wednesday, FLT said it has exercised a call option to acquire the logistics and industrial property in Wetherill Park, Sydney.
The completion of this acquisition would raise FLT's distribution per unit (DPU) for the three months ended Dec 31, 2015 to 1.44 Singapore cents from 1.41 cents on a pro forma basis.
It will also enlarge the FLT portfolio to 54 properties with a total gross lettable area (GLA) of about 1.2 million square metres (sqm), increase FLT's portfolio value by 3.5 per cent to A$1.74 billion, and lengthen its weighted average lease expiry to seven years from 6.6 years.
The property has a land tenure of 90 years and its surveyed GLA is 18,848 sqm. Located some 45 km from Sydney's central business district, the property is fully leased to Martin-Brower Australia Pty Ltd for a term of 20 years.
Martin Brower is one of the top end-to-end supply chain management solutions companies in the US and a key supplier of McDonald's.
This acquisition was funded by A$41 million debt, which was drawn down from FLT's five-year revolving credit facility, and some A$20.5 million from FLT's working capital.
Following the acquisition, FLT's aggregate leverage will increase to 29.8 per cent from 28.2 per cent as of Sept 30.
FLT had entered into three separate call option agreements during its June IPO with its sponsor FCL to acquire up to three properties.
The other two call options were exercised in August - one for a freehold property in Melbourne with GLA of 21,660 sqm and the other for a 99-year leasehold property in Brisbane with a GLA of 30,618 sqm. Both are also fully leased.
FLT's DPU for the three months ended Dec 31, 2015 will rise to 1.47 Singapore cents on a pro forma basis if all three acquisitions under the call options were completed.
Separately, there are 11 other properties that FLT's sponsor has granted it right of first refusal (ROFR).
Amendment note: In the original story, we referred to FLT's DPU proforma effects to be for the quarter ended Sept 30. It should be for the three months ended Dec 31, 2015. We also mentioned there were nine properties owned by its sponsor under ROFR, which was disclosed in its IPO prospectus. The group has since increased the number of ROFR properties to 11.