KUALA LUMPUR (Feb 5): CapitaLand Malaysia Trust (CLMT) is acquiring three prime freehold ready-built factories located at the Nusajaya Tech Park in Iskandar Malaysia, Johor from Nusajaya Tech Park Sdn Bhd for a combined RM27 million, marking the real estate investment trust's (REIT) entry into the industrial market and further diversifying its geographical footprint to Johor.
In a Bursa Malaysia filing by CLMT on Monday, CapitaLand Malaysia REIT Management Sdn Bhd (CMRM), the manager of CLMT, said MTrustee Bhd, the trustee of CLMT, had entered into a conditional sale and purchase agreement to acquire the three properties.
The value of RM27 million, negotiated on a willing buyer, willing seller basis, is in line with the independent market valuation of RM28.2 million commissioned by MTrustee, it added.
The properties consist of two semi-detached factories and one detached factory. The factories were completed about seven years ago, featuring a sleek, modern frontage with separate loading areas.
With a collective built-up area of 74,142 sq ft, the properties are fully leased to two tenants in the optics and medical sectors, namely Edmund Optics Malaysia Sdn Bhd and Altek Medical Sdn Bhd, with a weighted average lease to expiry of 5.2 years by rental income. The six-year lease terms with built-in rent escalations ranging from 2% per year to 6% per year will provide income stability to its portfolio, said CLMT.
The REIT intends to finance the proposed acquisition through debt.
CLMT said its portfolio will be strengthened with the addition of these high-quality industrial properties. Post transaction, the REIT’s enlarged portfolio will consist of 10 properties, with the proportion of industrial and logistics properties increasing from 10% to 11% of its total portfolio's net lettable area of approximately 4.4 million sq ft.
"The proposed acquisition is expected to generate an annual rental income of RM2 million, with a first-year yield of 7.3%. It will contribute positively to CLMT’s income, and is distribution per unit-accretive to CLMT unitholders on a pro forma basis," it added.
The transaction is expected to be completed by the fourth quarter of 2024.
In a separate statement, CMRM chief executive officer Tan Choon Siang said: “We are pleased to embark on the acquisition of our first industrial properties in Malaysia and expand into the fast-growing state of Johor. The Nusajaya Tech Park is highly sought after by multinational corporations due to its favourable geographical location and proximity to Singapore."
"In addition, Malaysia’s latest New Industrial Master Plan 2030 is set to transform and grow the country’s manufacturing sector, including creating high-value job opportunities and developing new and existing clusters. We believe that the southern region of Malaysia, particularly Iskandar Malaysia, will benefit from this initiative."
He said CMRM is confident that the proposed acquisition will enable the REIT to gain a foothold in Malaysia’s resilient industrial market and one of its largest economic hubs.
"This will position CLMT for further growth in 2024, and represents a significant milestone, as we accelerate our portfolio reconstitution journey, driving sustainable growth and diversifying our income sources.
"As the only Malaysia-listed REIT in Singapore-based CapitaLand Group, CLMT has access to a stable acquisition pipeline that will further enhance our existing portfolio. This includes the proposed acquisition and the acquisition of Queensbay Mall from CapitaLand Investment in November 2022.
"Looking ahead, we remain focused on pursuing growth targeting properties, with stable cash flows and strong operating metrics, while maintaining financial discipline,” added Tan.
CLMT said Johor, particularly Iskandar Malaysia, is an attractive investment destination within the manufacturing sector of the industrial market.
"With its competitive land and labour costs, Iskandar Malaysia has successfully attracted many high-tech and capital-intensive companies to base their operations there, supported by the Johor government’s business-friendly policies," it added.
The Nusajaya Tech Park is a 210-hectare integrated industrial development located at Gerbang Nusajaya in Iskandar Malaysia.
CLMT units closed down half a sen or 0.82% at 60.5 sen on Monday, giving the REIT a market capitalisation of RM1.66 billion. Its unit price has risen 8% so far this year and 6% over the last one year.
As at end-December 2023, CLMT's total asset value stood at RM5.1 billion.