KUALA LUMPUR (May 15): CapitaLand Malaysia Trust (CLMT) is adding a freehold logistics warehouse located at at the Hicom-Glenmarie Industrial Park in Shah Alam, Selangor, to its portfolio for RM39.7 million, and convert it into a temperature-controlled distribution centre.

Its trustee, MTrustee Bhd, has inked a sale and purchase agreement to acquire the property — a single-storey detached warehouse with an annexed three-storey office building and a built-up area of 84,755 sq ft — from Cynnyx Sdn Bhd, said CLMT manager, CapitaLand Malaysia REIT Management Sdn Bhd (CMRM), in a statement.

The purchase price is in line with the property's independent market valuation, commissioned by the trustee, of RM40.4 million, CMRM said.

At the same time, CMRM has executed a letter of offer with a "reputable international luxury fashion retailer", who is also one of its existing retail tenant, to lease the building for 10 years.

"The new lease is expected to commence in the first half of 2024 and will generate a gross rental income of RM3.5 million per annum with an approximate yield of 6.5%, providing CLMT with a stable income stream. The proposed acquisition will contribute positively to CLMT’s income upon the commencement of the lease in financial year 2024," CMRM said.

Under the agreement, CMRM will also undertake a convert-to-suit exercise and transform the property into a temperature-controlled distribution centre at an estimated cost of RM14.6 million. Together with the purchase price, CLMT's total investment outlay of RM54.3 million will be fully funded by bank borrowings.

"Post transaction, CLMT's proforma gearing will increase from 44.3% to 44.8%, which remains below the regulatory limit of 50%," CMRM said, adding the acquisition is expeted to be completed in the second half of 2023.

With the latest acquisition, CLMT will have a portfolio of eight properties, with logistics properties increasing from 7.8% to 9.6% of total net lettable area of 4.4 million sq ft, while portfolio occupancy is expected to improve from 89.25% as at March 31 to 89.3% in 2024.

“Following our successful entry into Malaysia’s logistics market last year, we are pleased to strengthen our logistics presence with another acquisition in the highly attractive Hicom-Glenmarie Industrial Park, widely regarded as a prime hub for logistics and warehouses in the Klang Valley due to its proximity to major arterial highways," said CMRM chief executive officer Tan Choon Siang.

"The proposed acquisition is a continuation of CLMT’s journey to drive sustainable growth and diversify income sources. It underscores our focus on executing and delivering on our growth initiatives to capture value in the fast-growing new economy sector and capitalise on the rising demand for high-quality logistics infrastructure in prime locations,” Tan said.

He also said the convert-to-suit exercise is a testament to CLMT's commitment to provide attractive real estate solutions for its tenants. "This exercise will showcase our property development expertise as we drive value creation for CLMT to scale up its logistics footprint,” he added.

CLMT's unit price closed half a sen or 0.99% higher at 51 sen on Monday (May 15), giving the trust a market capitalisation of RM1.36 billion.