Scomi to sell, lease back Rawang land to Axis REIT for RM42 mil

KUALA LUMPUR (Aug 2): Scomi Engineering Bhd’s (SEB) indirect unit will sell its industrial land in Rawang to Axis Real Estate Investment Trust (Axis REIT) and lease it back from the trust for RM42 million cash.

According to SEB’s filing yesterday, Scomi Coach Sdn Bhd, a wholly-owned unit of Scomi Transportation Systems Sdn Bhd, which is SEB’s wholly-owned subsidiary, together with SEB inked a sale and purchase agreement and a leaseback agreement with Axis REIT.

The land, located in Jalan Monorail, Kawasan Industri Sg Choh, Rawang, houses a three-storey office building attached to a single-storey factory and a four-storey office building with a single-storey factory.

The leaseback will be for 15 years, with an option to renew for another five years, said SEB.

As the original cost of the property was RM45 million, though its net book value as at March 31, 2016 was RM39 million, SEB said the sale will result in a one-off gain of about RM2 million for the group, which could be used for working capital requirements.

Separately, Axis REIT said the acquisition will be funded via existing bank borrowings.

It also shared that the leaseback of the property to SEB comes with an option to renew for another five years, at a rate to be agreed on. The acquisition has a starting net yield of 7.3% before Islamic financing cost, it added.

The deal is targeted to be completed by the end of this year, which will increase Axis REIT’s number of properties to 39.

SEB and Axis REIT closed unchanged at 28.5 sen and RM1.77 respectively yesterday.

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This article first appeared in The Edge Financial Daily, on Aug 2, 2016. Subscribe to The Edge Financial Daily here.