CapitaLand Malaysia Trust Hick-Glenmarie, in an image provided to REITsWeek.

CapitaLand Malaysia Trust (CLMT) is acquiring a freehold logistics warehouse in the Hicom- Glenmarie Industrial Park for MYR39.7 million.

In line with the proposed acquisition, the REIT has also executed a letter of offer with a luxury fashion retailer to fully lease the building for ten years.

The new lease is expected to commence in the first half of 2024 and will generate a gross rental income of MYR3.5 million per annum with an approximate yield of 6.5%.

The proposed acquisition will contribute positively to CLMT’s income upon the commencement of the lease in financial year 2024, said the REIT.

Under the agreement, the REIT will undertake a convert-to-suit exercise and transform the asset into a temperature-controlled distribution centre at an estimated cost of MYR14.6 million.

Including the purchase price of MYR39.7 million, CLMT’s total investment outlay of MYR54.3 million will be fully funded by bank borrowings.

Post-transaction, CLMT’s pro forma gearing will increase from 44.3% to 44.8%.

The acquisition is expected to take place in the second half of 2023.

Following the acquisition, CLMT’s enlarged portfolio will consist of eight properties with the proportion of logistics properties increasing from 7.8% to 9.6% of its total net lettable area.

Portfolio occupancy is expected to improve from 89.2% as at 31 March 2023 to 89.3% upon the commencement of the new lease in 2024.

CLMT was last done on the Bursa Malaysia at MYR0.51.

By Shariffa Al-Habshee

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