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AIMS Apac Reit proposes to buy Bulim Street logistics facility for S$129.6m

Aims apac reit KWE.png
The property is currently leased to a wholly-owned subsidiary of major Japanese freight forwarding and logistics group Kintetsu World Express.

THE trustee of AIMS Apac Reit (AA Reit) on Aug 7 entered into a put and call option agreement with Titan (Wenya) to acquire a ramp-up logistics warehouse at 7 Bulim Street for a purchase price of about S$129.6 million.

The total cost of acquisition is around S$135.5 million, after including an estimated stamp duty of around S$3.9 million and estimated transaction costs of about S$2 million.

The property will be acquired at an initial net property income (NPI) yield of 7.07 per cent, based on its NPI in the first year of ownership of S$9.2 million over the S$129.6 million purchase price. When based on the estimated total acquisition cost of S$135.5 million, NPI yield will be 6.76 per cent.

7 Bulim Street is a master-tenanted four-storey logistics facility with an ancillary office on each level. The property sits on a land area of 34,095 square metres (sq m), with a remaining land tenure of approximately 22.2 years as at June 30, 2020. The gross floor area of the property is 68,190 sq m.

It is located within the Jurong Innovation District - a planned one-stop, 600-hectare advanced manufacturing campus by the Singapore government which is in close proximity to the future Tuas Mega Port, current PSA ports and Tuas Checkpoint.

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The property will be acquired with an existing master lease to KWE-Kintetsu World Express, a wholly-owned subsidiary of major Japanese freight forwarding and logistics group Kintetsu World Express.

KWE fully leased the property for a term of 10 years from Jan 1, 2014, with an option to renew for an additional five years.

The Reit manager has proposed to fund the acquisition through a combination of the net proceeds from the issuance of S$123.5 million in perpetual securities and debt financing of S$12 million.

The proposed acquisition will add 0.18 Singapore cent to the fiscal 2020 distribution per unit of 9.5 cents, amounting to 9.68 cents on a pro forma basis.

Koh Wee Lih, chief executive of AA Reit's manager said: "The yield-accretive acquisition will enhance the income of AA Reit's portfolio amid the current challenging market conditions, and the strong lease covenant and master tenant provide stability."

The proposed acquisition is expected to increase AA Reit's logistics and warehouse cluster to 51.1 per cent from 46.4 per cent if completed. It will also raise rental contribution from master leases to 36.4 per cent from 30.3 per cent. 

Overall portfolio occupancy rate will improve to 94.2 per cent from 93.6 per cent on a pro forma basis. 

Units of AIMS Apac Reit closed at S$1.19 on Friday, down S$0.02 or 1.7 per cent.

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