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Ascendas India Trust to acquire 7th warehouse in India for S$42m

Warehouse Photo (External View).JPG
One of six operating warehouses that Ascendas India Trust acquired in February 2018. As the six are close to full occupancy, the trust is looking to develop an additional warehouse in the same free-trade warehousing zone in Panvel.

ASCENDAS India Trust (a-iTrust) is planning to finance the construction of an additional warehouse in western India and acquire it upon completion for a total investment of around 2.15 billion Indian rupees (S$42.1 million).

The warehouse is to be located in the Arshiya Free Trade Warehousing Zone (FTWZ) in Panvel near Mumbai in western India, and will have a total leasable area of 325,503 square feet (sq ft), the trustee-manager of the mainboard-listed business trust said on Thursday morning.

This proposed transaction comes after a-iTrust had in February 2018 completed the acquisition of six operating warehouses with a total leasable area of 832,249 sq ft at the same FTWZ.

As these six existing properties are near full occupancy, a-iTrust is proposing the development of a seventh warehouse to meet additional demand from existing and prospective tenants, the trustee-manager said on Thursday.

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It had entered into an agreement for the construction funding and forward purchase of the additional warehouse with a subsidiary of Arshiya Limited. Arshiya is a free-trade warehousing zone developer in India, operating two FTWZs – the one in Panvel and another in Khurja near Delhi.

AIPL, a special purpose vehicle that is a co-developer and a wholly-owned subsidiary of Arshiya, will construct the property.

The total consideration is estimated to be 2.15 billion rupees, which includes a deferred consideration of some 212.3 million rupees as well as the construction funding which is expected to not exceed 700 million rupees.

To finance the construction, a subsidiary of a-iTrust will subscribe to non-convertible secured debentures issued by AIPL totalling up to 700 million rupees. The trustee-manager said it intends to fund this using existing cash resources in India.

For the forward purchase, another subsidiary of the trust will acquire 100 per cent interest in AIPL, upon completion of the property and subject to other conditions precedent. Details of the mode of financing for the acquisition will be determined nearer to the point of closing.

The acquisition is expected to complete by June 30, 2020.

Once it has acquired the new warehouse, a-iTrust will lease it to a subsidiary of Arshiya for six years under a master lease agreement. Arshiya will pay rent to a-iTrust, as well as operate and manage the warehouse.

The acquisition is expected to increase the trust’s distribution per unit by around 0.03 Singapore cent.

Units of Ascendas India Trust closed unchanged at S$1.39 on Wednesday.

The trustee-manager, Ascendas Property Fund Trustee, is a wholly-owned subsidiary of CapitaLand.