SINGAPORE - Mainboard-listed AIMS AMP Capital Industrial Reit (AA Reit) announced on Friday a $41.7 million redevelopment plan for 30 and 32 Tuas West Road, which will increase the asset's value by four times.

The redevelopment will transform the existing two three-storey detached industrial buildings into a five-storey ramp-up warehouse facility.

It said that upon completion, the asset is expected to be valued at $60.7 million from its current value of $14.1 million. The gross floor area (GFA) will nearly double from 159,717 sqft to approximately 287,866 sqft, while the plot ratio will rise from 1.15 to 2.07.

Following its completion, SGX-listed CWT Limited will have staggered master leases on the warehouse with lease terms varying between 32 months to four years and two months for the different floors and with an annual rent escalation.

Annual rental income will increase to $4.15 million (upon completion) from $0.82 million3, with the net yield on cost of this redevelopment estimated to be around 7.2 per cent, said AA Reit. Property income is expected to be reflected in the 2Q FY2018 quarter, it added.

The redevelopment will impact distribution per unit (DPU) by 0.35 cents per unit, said the Reit.

Said the Reit's chief executive officer Mr Koh Wee Lih: "This unlocks significant value in our portfolio, while minimising risk through a fixed price turnkey design and construct contract, and also securing a master lease for the full property with a high quality existing tenant.

"It is another example of how we are transforming an underperforming asset whose occupancy was at 32.7 per cent as at 31 March 2015 into a high-quality asset delivering stable, sustainable returns to our unitholders.

He added: "The redevelopment of 30 and 32 Tuas West Road builds on the successful partnership we already have with CWT Limited, who have held the master lease for 100 per cent of our 20 Gul Way asset."

The redevelopment of 30 and 32 Tuas West Road will make the Reit one of the largest ramp-up warehouse landlords in Singapore it said. Its portfolio of other ramp-up warehouses include 20 Gul Way and 27 Penjuru Lane.

The redevelopment will commence in the third quarter of its 2016 financial year and is targeted for completion in Q1 FY2018.

The redevelopment of 30 and 32 Tuas West Road also coincides with the Tuas West MRT Extension due for completion in 2016, and the Government's plans for a new container port in Tuas, said AA Reit. The facility is located a short drive from the Tuas Checkpoint and within minutes to the future Tuas Link and Tuas West Road MRT stations.