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ASCENDAS India Trust (a-iTrust) has agreed to acquire six warehouses from Arshiya Limited for 5.34 billion rupees (S$112.5 million).
In a late night announcement on Thursday, its trustee-manager, Ascendas Property Fund Trustee, said it has signed definitive agreements for this acquisition.
The closing of the deal is subject to certain conditions being met, including consent from Arshiya's lenders and a satisfactory completion of due diligence.
Upon completion of the deal, a subsidiary company of Arshiya Limited will enter into a master lease agreement with a-iTrust to lease the warehouses for a period of six years. Arshiya will continue to operate and manage the warehouses, and pay pre-agreed rentals to aiTrust.
Sanjeev Dasgupta, CEO of the trustee-manager, called the proposed acquisition an "inflexion point for a-iTrust".
"Entering the high growth logistics sector in India helps us to diversify our asset portfolio," he explained.
"We would benefit from the e-commerce boom and regulatory changes such as the introduction of Goods and Services Tax. Our forward purchase agreement for future warehouses to be built by the vendor provides the trust with a steady pipeline of warehouses to acquire over the coming years."
The trustee-manager plans to finance the acquisition using existing cash resources in India and other financing options.
The payment for the assets include an upfront payment of 4.34 billion rupees and an additional deferred consideration of up to one billion rupees to be paid over the next four years, contingent on the achievement of certain performance milestones.
Located in Panvel, near Mumbai, these six warehouses are part of a Free Trade Warehousing Zone (FTWZ) spread over 146 acres of freehold land. They have attracted quality multi-national customers, including third-party logistic provider DHL Logistics and corporate tenants Huawei and Cisco Systems.
Within the FTWZ facility, Arshiya has substantial land bank to build additional warehouses spanning at least 2.8 million sq ft.
To provide a future pipeline of warehouses for acquisition, a-iTrust has entered into an agreement with Arshiya on an option to part-fund the construction of future warehouses within the FTWZ, and to acquire these warehouses when completed, subject to the fulfilment of certain terms and conditions.