KUALA LUMPUR (July 12): KIP Real Estate Investment Trust (REIT) is buying property assets that worth RM78.7 million from agrochemicals company Hextar Global Bhd and its major shareholder Datuk Eddie Ong Choo Meng.
In a filing with Bursa Malaysia, KIP REIT — in which Ong has a 20% stake — said it is buying two adjoining parcels of leasehold land measuring 229,311 sq ft collectively for RM27 million from Hextar Chemicals Sdn Bhd, a wholly-owned subsidiary of Hextar Global.
Hextar, in which Ong has a 65% stake, said in a separate filing that the divestment will be done via a sale and leaseback agreement, whereby the company will lease back the property under a 15-year lease, enabling the company to continue using the manufacturing facility on the land.
Hextar said the transaction, which is expected to be completed in the second quarter next year, is estimated to result in a disposal gain of about RM4.26 million, and proceeds from the land sale will be used to finance its working capital.
"We are very happy to have reached an agreement with KIP REIT. This sale and leaseback transaction marks another positive move by Hextar to optimise its business financing plan and to attain greater flexibility in meeting the company's evolving business needs," said Ong.
KIP REIT said it is also buying two other parcels of leasehold land collectively measuring 429,050 sq ft for RM51.7 million from Hextar Industrial Chemicals Sdn Bhd and Teju Logistics Sdn Bhd.
Ong owns the entire 100% stake in Hextar Industrial and a 70% stake in Teju Logistics, with the remaining 30% held by his father Datuk Ong Soon Ho.
The latest acquisitions will be retail mall-focused KIP REIT's maiden venture into industrial assets.
KIP REIT said these assets will add about 350,000 sq ft of lettable area to its portfolio.
"The properties will be leased to related companies of the Hextar group on a triple net basis for a fixed period of 15 years from the date of completion of [these] sales and purchase agreements at a total initial annual rental of about RM5.1 million with built-in agreed rental escalations of 13% scheduled on year four, year seven and year 11," the REIT said.
KIP REIT's executive director Datuk Ong Kook Liong added: "While we will continue to manage all our retail-focused assets, we will also continue to explore growth opportunities in the industrial and warehousing sub-sectors to grow our income base investment portfolio of industrial assets."
KIP REIT closed unchanged at 89 sen per unit, valuing the company at RM449.72 million.
Hextar Global gained seven sen or 4.43% to RM1.65, giving it a market capitalisation of RM2.17 billion.