Ascendas India Trust plans to provide construction funding and to buy two buildings near Mumbai, the trust manager announced yesterday.
The transaction will involve a total debt-and-equity investment of up to about 9.3 billion Indian rupees (S$183.5 million).
Under the deal, Ascendas will subscribe to 5 billion rupees of 30-year secured debentures issued by the co-developer of two out of the four buildings in the Aurum Platz IT Park.
Proceeds from the debentures will be used for construction funding. The coupon on the debentures was not disclosed.
The trust will then buy 100 per cent of the shares of the co-developer, which comprises two vehicles owned by privately held Aurum Platz, for up to 9.3 billion rupees based on certain leasing milestones or 24 months from the actual completion date, whichever is earlier.
The purchase prices will be determined by a formula that accounts for factors such as rent, occupancy and capitalisation rates.
Percentage of the trust's enlarged portfolio, by super built-up area, that Mumbai will account for with the acquisition.
The two buildings the trust is acquiring will have a "super built-up area" of 1.4 million sq ft. This means rent is payable on the sum of the floor area within the walls, including the area occupied by the walls and common areas such as lobbies, lift shafts, toilets and staircases.
Completion of the construction is expected by the second half of this year for the first building, and by early 2020 for the second.
The two buildings will be acquired separately.
Ascendas India Trust will also have right of first refusal on the remaining two buildings in the Aurum IT Sez development. These have a super built-up area of about 1.5 million sq ft.
The properties are in Navi Mumbai, off the Thane-Belapur Expressway, a key corridor for information technology businesses in Mumbai, Ascendas India Trust said.
A new international airport in Navi Mumbai is scheduled for completion next year, which will enhance the importance of the location, the trust said.
With the acquisition, Mumbai will account for 16 per cent of the trust's enlarged portfolio by super built-up area, up from the 7 per cent share now. The new properties would have generated $9.4 million of net profit for the financial year ended March 31, 2018, if acquired that year, and distribution per unit would have increased to 6.21 cents from 6.1 cents, the trust said.
Net asset value per unit would have increased to 91 cents from the actual 90 cents if the acquisition had been completed by March 31.