CFA Society Singapore
SINGAPORE (Feb 13): Vibrant Group’s 51%-owned subsidiary, LTH Logistics, has entered into a conditional put and call option agreement to sell its logistics and warehousing facility at Jurong Island for $227.5 million to SGRE Banyan Pte. Ltd.
The consideration comes at an 8.3% premium to CBRE’s $210 million valuation of the property as at 15 Oct 2018, and is subject to a $14.25 million upfront land premium payable to JTC.
Located at 121 Banyan Drive, the property comprises two plots of land with a six-storey ramp-up warehouse facility with ancillary offices, as well as two blocks of single storey warehouse and an open yard within Jurong Island.
These are currently being utilised by Vibrant for its logistics business under leasehold interests for a term of 30 years and 29 years and eight months that commenced in Sept 2011 and Dec 2011, respectively.
Further terms of 29 years are to be granted by JTC for both leases each.
In all, the property has a gross floor area (GFA) of 65,764 sq m and a site area of 43,142 sq m.
Upon completion of the sale, both LTH Logistics and SGRE Banyan will enter into a lease agreement where LTH Logistics will occupy 100% of the property’s total GFA for a term of 10 years.
Total rent payable by LTH Logistics for the first year is $15.3 million excluding government service tax (GST).
This will be followed with a rental increase of 1.75% per annum starting from the lease term’s second year, with LTH Logistics being awarded a 12 month rent-free period of six months each in the fifth and tenth year of the lease.
In its late night filing on Tuesday, Vibrant says it intends to use net proceeds of the sale to reduce its debt, expand its main businesses, and for working capital.
CBRE, which brokered the deal, says this represents the first sale-and-leaseback transaction to take place on Jurong Island.
“We are delighted to have represented Vibrant Group’s subsidiary, LTH Logistics, in this proposed sale-and-leaseback arrangement, which we understand is the first asset to be securitised on Jurong Island," comments Rimon Ambarchi, executive director of industrial and logistics services at CBRE
Shares in Vibrant closed flat at 14 cents on Tuesday.