7 Bulim Street. (Photo: AIMS APAC REIT)

AIMS APAC REIT has agreed to acquire a ramp-up warehouse at 7 Bulim Street in Singapore for SGD129.6 million (USD95 million).

The warehouse is fully leased to KWE-Kintetsu World Express (KWE), and it will be acquired at an initial net property income (NPI) yield of 7.07% .

“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”, said Koh Wee Lih, CEO of the REIT's manager.

The master lease with KWE commenced on 1 January 2014 for a term of 10 years, with a five-year option to renew the lease at the then prevailing market rate by 30 June 2023.

The purchase consideration is in line with an independent valuation conducted by Savills Valuation And Professional Services (S) Pte Ltd.

The total cost of the acquisition is estimated at approximately SGD135.5 million, comprising the purchase consideration of SGD129.6 million and transaction costs of approximately SGD5.9 million.

It will be funded by a combination of the net proceeds from the issuance of perpetual securities of SGD123.5 million, and debt financing of SGD12.0 million.

On a pro forma funding structure of perpetual securities and debt financing, the proposed acquisition will add 0.18 cents to the REIT’s FY2020 distribution per unit (DPU).

Following the completion of the acquisition, AIMS APAC REIT will have a total of 28 properties, of which 26 properties are located throughout Singapore, a property located in Gold Coast, Queensland, Australia and a 49% interest in a property located in Macquarie Park, New South Wales, Australia.

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.