KIP REIT expands portfolio with RM98m acquisition of four industrial properties

• In a bourse filing on Thursday, the trust said Pacific Trustees Bhd, acting as its trustee, has entered into four separate sale and purchase agreements (SPAs) for the acquisitions.

KUALA LUMPUR (Aug 29): KIP Real Estate Investment Trust (KL:KIPREIT), which primarily invests in retail properties, has proposed to acquire another four industrial properties for a total purchase price of RM98.3 million.

In a bourse filing on Thursday, the trust said Pacific Trustees Bhd, acting as its trustee, has entered into four separate sale and purchase agreements (SPAs) for the acquisitions.

The first SPA was signed with Sin Chee Heng Sdn Bhd to acquire a leasehold land with an industrial building in Cheras Jaya for RM22.6 million. The building includes a factory with a net lettable area of 66,632 sq feet.

The second SPA involves the purchase of a warehouse on 5.7 acres of freehold land in Pasir Gudang, Johor, from PK Fertilizers Sdn Bhd for RM23.3 million. The warehouse has a net lettable area of 184,120 sq ft.

Following these two acquisitions, the properties will be leased back to the respective sellers. Sin Chee Heng will lease back the Cheras Jaya property for an initial three-year term, with the option to renew for up to nine additional years. PK Fertilizers will lease back the Pasir Gudang property with an initial three-year tenancy, with the option to renew for up to 12 additional years.

The third SPA was signed with Channel Legion Sdn Bhd to acquire an existing lease over part of a leasehold land with an industrial building in the Port Klang Free Zone, Pulau Indah for RM23.7 million. The warehouse, situated on 6.4 acres of leasehold land with a net lettable area of 193,365 sq feet, will be leased back to Teju Logistics Sdn Bhd for an initial three-year term, with the option to renew for up to 12 more years.

The final SPA involves the acquisition of a processing plant sited on 9.7 acres of leasehold land in Bintulu, Sarawak, from Teju Logistics Sdn Bhd for RM28.7 million. The plant has a net lettable area of 207,315 sq feet, with KIP REIT leasing the property to Hextar Solutions Sdn Bhd for an initial three-year term, with the option to renew for up to 12 additional years.

The purchases will be fully funded in cash through two tranches of medium-term notes with five-year tenures. KIP REIT said the notes will have monthly coupon payments at a rate of 'cost of funds + 1.20% per annum.'

The trust said the acquisitions and tenancies are expected to be completed in the fourth quarter of 2024.

Upon completion, KIP REIT’s portfolio will expand to 15 assets, including the seven KIPMalls, AEON Mall Kinta City and three existing industrial properties in Pulau Indah. This expansion will increase its total net lettable area by 30.8%, from the current 2.08 million sq ft to 2.73 million sq ft.

“These acquisitions are integral to our long-term strategy of diversifying our portfolio to include industrial properties to enhance our revenue stream," said KIP REIT chief executive officer Valerie Ong Pui Shan in a statement, adding that the purchase of the Sarawak property marks the trust's first venture into the state.

She said the government's focus on manufacturing and the rise of e-commerce have increased demand for industrial properties, particularly those near key transportation hubs.

"This strategic move aligns with our commitment to adapt to market demands and strengthen our investment portfolio,” Ong added.

Shares in KIP REIT closed unchanged at 90 sen on Thursday, giving the trust a market value of RM553.67 million.

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