KUALA LUMPUR (Nov 2): Atrium Real Estate Investment Trust (REIT) plans to buy and lease back two pieces of land in Penang from Lumileds Malaysia Sdn Bhd, a wholly-owned subsidiary of Lumileds International BV, for a combined RM180 million cash.

The trust’s manager Atrium REIT Managers Sdn Bhd believes that the proposed acquisitions represent a good opportunity for the trust to expand its existing portfolio of investment properties.

It is also of the view that the two properties will provide the REIT with a stable and sustainable income stream for a committed lease period of 15 years augmented by a rental escalation every year.

“The proposed acquisitions are expected to be earnings per unit- and distribution per unit-accretive.

“Based on Atrium REIT’s audited financial statements for the financial year ended Dec 31, 2017, the highest percentage ratio applicable to the proposed acquisitions was 64.41% of the total asset value of the trust as at Dec 31, 2017,” it added.

In a filing with Bursa Malaysia yesterday, Atrium REIT said it had accepted the letter of offer by Lumileds Malaysia Sdn Bhd for the proposed acquisitions.

The first transaction involves the acquisition and leaseback of a 7.62-acre (3.08ha) piece of leasehold land in Bayan Lepas FIZ Phase 3, together with the factory and all buildings erected on the site, from Lumileds for RM50 million.

The second transaction involves the acquisition of a lease and leaseback for a bigger piece of land measuring 11.82 acres in Kawasan Perindustrian Bayan Lepas Fasa 4 for RM130 million. Lumileds had signed a lease arrangement with landowner Penang Development Corp on Feb 11, 2011 to lease the property for a period of 30 years, expiring on Feb 10, 2041.

Atrium REIT said it plans to fund the proposed acquisitions via a combination of bank borrowings and proceeds raised from fundraising exercises to be undertaken by it.

The proposals are subject to the approval of Atrium REIT’s unitholders in an extraordinary general meeting to be convened.

This article first appeared in The Edge Financial Daily, on Nov 2, 2018.

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