MACARTHURCOOK Industrial Reit (MI-Reit) has signed an agreement to acquire an office and warehouse facility in the Tai Seng industrial precinct for $25 million.
Under the agreement, Powermatic Data Systems, which is listed on the Singapore Exchange, will lease back the property at 135 Joo Seng Road for five years with the option to extend for another five years. The lease will commence upon the completion of the acquisition, which is scheduled for February 2008.
The property was transacted at the initial yield of 7.3 per cent, and will be accretive to MI-Reit’s distribution per unit following completion, said MacarthurCook Investment Managers (Asia) Ltd (MCKIM), the manager of the Reit.
Chris Calvert, CEO of MCKIM, said: ‘We are pleased with the acquisition of 135 Joo Seng Road. The inclusion of SGX-listed Powermatic as one of our tenants further enhances our portfolio, of which approximately 70 per cent is comprised of SGX-ST listed companies or their subsidiaries.
‘This acquisition provides unitholders with the twin benefits of medium to long-term income stability and also the opportunity for capital and rental value growth, which will form the steadily increasing demand for quality office accommodation in the Tai Seng industrial precinct.’
The inclusion of the property in MI-Reit’s portfolio will further contribute to income stability through enhanced tenancy and property diversification, and reduced exposure to its largest tenant, UE Tech Park Pte Ltd, from 31.6 per cent to 29.4 per cent of portfolio income, MCKIM said.
With the latest acquisition, MI-Reit will have total investments of approximately $642.6 million in 22 properties.
It intends to finance the acquisition wholly with debt but may consider alternative means of funding as appropriate. Assuming 100 per cent debt financing, the acquisition will increase MI-Reit’s committed gearing level from 36.7 per cent to 39.5 per cent.
Source : Business Times - 30 Nov 2007