Sunway REIT buys industrial property for RM91.5m

PETALING JAYA: Sunway REIT Management Sdn Bhd, the manager of Sunway Real Estate Investment Trust (SunREIT), is acquiring an industrial asset in Shah Alam, Selangor, for RM91.5 million cash.
After the acquisition, SunREIT’s portfolio size will increase from RM6.43 billion as at June 30, 2016 to RM6.52 billion with a total of 15 assets, strengthening the REIT’s current position as one of the largest REITs in Malaysia by asset value, thus increasing its visibility to investors.
In a filing with Bursa Malaysia yesterday, SunREIT said it has entered into a conditional sale and purchase agreement with Champion Edge Sdn Bhd to acquire the leasehold industrial land measuring 62,587.34 square metres with three low-rise office buildings that have factories and warehouses attached to them.
“With the proposed acquisition, SunREIT will benefit from the increase in the enlarged portfolio’s weighted average lease to expiry based on secured gross rental income.
“The weighted average lease to expiry of SunREIT’s enlarged portfolio will increase to about 2.23 years after the completion of the proposed acquisition from about 1.98 years as at June 30, 2016,” it said.
The property is sold together with/subject to an existing lease, which has a remaining duration of about 18 years, expiring on Dec 31, 2034. The initial term will automatically be extended for one further term of five years.
The lessee, IDS Manufacturing Sdn Bhd, currently pays annual rental of RM5.6 million on a triple net lease basis.
The rent is subject to review every three years and the next review date is on Jan 1, 2019. At each rent review date, the rent shall be increased to the greater of the then prevailing fair market value and CPI adjustment, subject to a cap of 10%.
SunREIT said that the lessee is a reputable company part of a listed Hong Kong entity, who is a contractor in the manufacturing of pharmaceutical products, food and toiletries on behalf of its principals and warehousing oeprations.
It also said the property is a good quality asset due to its strategic location within the industrial hub of Shah Alam, accessibility via three major highways and close proximity to the KL International Airport in Sepang and Port Klang.