CapitaLand Malaysia Trust buys second logistics property in Malaysia for RM39.7m
Uma Devi
CAPITALAND Malaysia Trust (CLMT) on Monday (May 15) said its trustee MTrustee has entered into a sale and purchase agreement to acquire a freehold logistics warehouse in Malaysia for RM39.7 million (S$11.8 million).
The price of the property was negotiated on a willing-buyer willing-seller basis, and is in line with the property’s independent market valuation of RM40.4 million that was commissioned by CLMT’s trustee. The completion of the acquisition is expected to take place in the second half of 2023, CLMT announced in a bourse filing on Monday.
The logistics property is a single-storey detached warehouse with an annexed three-storey office building and a built-up area of 84,755 square feet (sq ft). The property is located at the Hicom Glenmarie Industrial Park in Shah Alam, Selangor.
The seller of the property is Cynnyx, a company incorporated in Malaysia that is principally involved in investment holding.
This acquisition is CMLT’s second venture into logistics properties. The trust acquired its first in June last year, when it entered into a sale-and-purchase agreement to acquire two contiguous plots of freehold land and their industrial properties in Penang’s Sungai Jawi district for RM80 million.
CapitaLand Malaysia Reit Management (CMRM), the manager of CLMT, has executed a letter of offer with a “reputable international luxury fashion retailer” to fully lease the Shah Alam building for 10 years.
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The new lease is expected to commence in the first half of 2024 and will generate a gross rental income of RM3.5 million per year with an approximate yield of 6.5 per cent. This will provide CLMT with “a stable income stream”, the trust said.
The proposed acquisition will contribute positively to CLMT’s income when the lease begins in FY2024, the trust added.
Under the agreement, CMRM will also undertake a convert-to-suit exercise and transform the logistics property into a temperature-controlled distribution centre at an estimated cost of RM14.6 million.
Including the purchase price of RM39.7 million, CLMT’s total investment outlay of RM54.3 million will be fully funded by bank borrowings.
Post-transaction, CLMT’s pro-forma gearing will increase to 44.8 per cent from 44.3 per cent, but this is still below the regulatory limit of 50 per cent.
Tan Choon Siang, chief executive of CMRM, said: “The proposed acquisition is a continuation of CLMT’s journey to drive sustainable growth and diversify income sources.
“It underscores our focus on executing and delivering on our growth initiatives to capture value in the fast-growing new economy sector and capitalise on the rising demand for high-quality logistics infrastructure in prime locations.”
Following the acquisition, CLMT’s enlarged portfolio will consist of eight properties with the proportion of logistics properties increasing to 9.6 per cent from 7.8 per cent of the total net lettable area of about 4.4 million sq ft.
Portfolio occupancy is expected to rise to 89.3 per cent from 89.2 per cent as at end-March when the new lease commences in 2024.
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