SINGAPORE - Viva Industrial Trust (VIT) has agreed to purchase a newly completed food services logistics/warehouse facility for S$87.3 million from Sharikat National (Pte) Ltd.
In addition to the purchase price, VIT must pay an upfront land premium for the balance of the 30-year JTC lease term estimated at S$5.7 million, the trust's managers announced on Thursday (Oct 27).
The property, which is located at 6 Chin Bee Avenue within Jurong Industrial Estate, has been independently valued at S$94.3 million, said VIT.
It has five levels of high specifications logistics/warehouse facilities, including two levels of integrated cold room facility, one level of ambient temperature foods storage facility, as well as a mezzanine level on each warehouse floor accommodating storage, kitchen and ancillary showroom and offices.
The property occupies a gross floor area of 324,166 square feet and obtained its Temporary Occupation Permit on April 12.
Commenting on the proposed acquisition, Mr Wilson Ang, CEO of the trust's managers, said, "Despite the competitive environment, we are still able to secure a quality asset that adds value to VIT's portfolio and 6 Chin Bee Avenue is a great addition which not only diversifies VIT's asset and tenant mix, but also enable us to tap on Singapore's growing food services sector which is more recession resilient."
VIT said there is a growing demand for food storage and distribution facilities due to the robust growth in the food franchising sector. E-commerce and direct to consumer deliveries of temperature-sensitive products represent a great opportunity for cold chain service providers and create additional demand for refrigerated deliveries and warehouses near major population centres, it added.
When the purchase is completed, the property will be leased to Sharikat Logistics Pte Ltd for a 7-year master lease contributing annual revenue of S$7.44 million to VIT, with an option to renew for a further term of 3 years. There will also be a 1.5 per cent rental escalation per annum at the beginning of the third year and for every subsequent year of the lease term.
To partly fund the proposed acquisition, VIT launched a private placement of 60.8 million new stapled securities at an issue price of S$0.74 per unit to raise gross proceeds of approximately S$45 million. The private placement was strongly oversubscribed by new and existing institutional investors.
The proposed acquisition will also be partly funded by way of the issuance of S$23.0 million worth of stapled securities in VIT to the vendor on the date of completion of the sale.