Ascendas India Trust (a-iTrust) is planning to finance the construction of a seventh warehouse in western India and acquire it on completion for a total investment of 2.15 billion rupees (S$42.1 million).
To be located in the Arshiya Free Trade Warehousing Zone (FTWZ) in Panvel near Mumbai, it will have a total leasable area of 325,503 sq ft, the trustee-manager of the mainboard-listed business trust said yesterday.
The proposed transaction comes after a-iTrust completed in February last year the acquisition of six operating warehouses with a total leasable area of 832,249 sq ft in the same FTWZ.
As these six existing properties are near full occupancy, a-iTrust is proposing the development of a seventh warehouse to meet additional demand from existing and prospective tenants, the trustee-manager said yesterday.
It has entered into an agreement for the construction funding and forward purchase of the additional warehouse with a subsidiary of Arshiya Limited.
Arshiya is a free-trade warehousing zone developer in India and operates two FTWZs - the one in Panvel and another in Khurja, near Delhi.
AIPL, a special purpose vehicle that is a co-developer and a wholly owned subsidiary of Arshiya, will construct the property.
The total consideration is estimated to be 2.15 billion rupees, which includes a deferred consideration of some 212.3 million rupees as well as the construction funding, which is expected to not exceed 700 million rupees.
To finance the construction, a subsidiary of a-iTrust will subscribe to non-convertible secured debentures issued by AIPL totalling up to 700 million rupees. The trustee-manager said it intends to fund this using existing cash resources in India.
For the forward purchase, another subsidiary of the trust will acquire 100 per cent interest in AIPL, on completion of the property and subject to other conditions precedent.
Details of the mode of financing for the acquisition will be determined closer to the point of closing.
The acquisition is expected to be completed by June 30 next year.
Once it has acquired the new warehouse, a-iTrust will lease it to an Arshiya subsidiary for six years under a master lease agreement. Arshiya will pay rent to a-iTrust, and also operate and manage the warehouse.
The acquisition is expected to increase the trust's distribution per unit by around 0.03 cent.
Units of a-iTrust closed at $1.40 yesterday, up one cent or 0.72 per cent.
The trustee-manager, Ascendas Property Fund Trustee, is a wholly owned subsidiary of CapitaLand.