AIMS APAC REIT to acquire property in Jurong Innovation District for $129.6 mil; divests Kaki Bukit property for $4.5 mil

By Felicia Tan / The Edge Singapore | August 11, 2020 2:00 PM SGT
SINGAPORE (EDGEPROP) - The manager of AIMS APAC REIT (AAREIT) announced on Aug 11 that the REIT has acquired a master-tenanted four-storey ramp-up logistics warehouse at the Jurong Innovation District.
On Aug 7, AIMS APAC REIT (AAREIT) entered into a Put and Call option agreement to acquire 7 Bulim Street from Titan for a purchase consideration of $129.6 million.
The property, which is located in the Jurong West Logistics Cluster, will be acquired at an initial net property income (NPI) yield of 7.07%. The yield is based on the property’s NPI of $9.2 million in its first year of ownership.
The property will be acquired with an existing master lease to KWE, a wholly-owned subsidiary of a major Japanese freight forwarding and logistics group.
The current lease began on Jan 1, 2014, for a term of 10 years, with a five-year option for the master tenant to renew its lease at the then-prevailing market rate by June 30, 2023.
The manager says the proposed acquisition is expected to enhance AAREIT’s portfolio, increasing its Logistics and Warehouse cluster to 51.1% from 46.4%. Its overall portfolio occupancy rate will also increase to 94.2% from 93.6% on a pro forma basis.
“The Proposed Acquisition further strengthens AA REIT’s portfolio of industrial and logistics assets in Singapore, and is in line with our strategy to build a high-quality, diversified portfolio of assets that create long-term value for our Unitholders,” says Koh Wee Lih, CEO of the manager.
“The yield accretive acquisition will enhance the income of AA REIT’s portfolio amidst the current challenging market conditions, and the strong lease covenant and master tenant provides stability. The modern ramp-up warehouse presents an attractive long-term investment opportunity, as a strategically located property within the Jurong Innovation District, a first in this advanced manufacturing campus, with good connectivity to major expressways, and the future Tuas Mega Port and Checkpoint,” he adds.
Separately, AAREIT announced that its wholly-owned subsidiary Raymond Construction has sold its property at 57 Kaki Bukit Place for a purchase consideration of $4.5 million.
The property, a five-storey terrace B2 factory building, has a leasehold tenure of 60 years commencing from Nov 20, 1995. It has been vacated since May 2018.
The disposal has since been completed and will result in a positive cash flow of $4.2 million (after deducting expenses incurred), which will improve the liquidity of the group.
The disposal is expected to result in a gain on disposal of approximately $2.1 million based on the audited adjusted carrying amount of the property of some $2.3 million as at June 30, 2019.
As at 9am, units in AIMS APAC REIT were changing hands flat at $1.19.
Check out the latest listings near Jurong Innovation District, Kaki Bukit MRT Station
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