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Cache Logistics Trust to acquire warehouse in Australia
CACHE Logistics Trust is proposing to acquire a single-storey logistics warehouse and office facility in Victoria, Australia for A$41.2 million (S$39.5 million), with an initial property yield of 6.8 per cent, the reit's manager announced on Wednesday.
The acquisition will be Cache's largest warehouse to date, with a land area of 83,020 square metres and a net lettable area of 37,853 sq m. It is located in the industrial suburb of Altona, close to main arterial roadways, the Port of Melbourne and Melbourne's central business district.
The property is currently 76 per cent anchored by a Melbourne-based transport and logistics company, specialising in container transport services in Melbourne metropolitan and regional areas. The weighted average to lease to expiry is 2.53 years. The lease structure includes a fixed rental escalation of 3.25 per cent per annum, as well as recovery of land tax and all property outgoings.
The vendor, AGIT Investment Pty Ltd, has agreed to provide a two-year rental guarantee for the balance 24 per cent vacant warehouse space on market rental terms, including 3.25 per cent annual rental escalation.
Cache said the proposed acquisition is in line with its portfolio rebalancing and growth strategy, recycling capital with strategic divestments and acquisitions.
"The proposed acquisition will not only enhance income and geographic diversification and provide income growth, but also strengthen Cache's existing portfolio through increasing the proportion of high-quality, freehold properties," it said.
The deal will be funded by a combination of debt and the net sale proceeds of about S$16 million from the divestment of Jinshan Chemical Warehouse. Upon completion of the deal, expected by end-March 2019, Cache's aggregate leverage will be 36.9 per cent.
Post acquisition, Cache's properties in Australia - comprising 17 high-quality logistics warehouses along the eastern seaboard - would make up about 30.8 per cent of its assets under management.
Cache Logistics Trust units closed unchanged at 72.5 Singapore cents on Wednesday before the announcement.