Kuala Lumpur, 5 February 2024 – CapitaLand Malaysia REIT Management Sdn. Bhd. (CMRM), the manager of CapitaLand Malaysia Trust (CLMT), is pleased to announce today that MTrustee Berhad, the Trustee of CLMT, has entered into a conditional sale and purchase agreement to acquire three prime freehold ready-built factories (the Subject Properties) located at the Nusajaya Tech Park in Iskandar Malaysia, Johor (the Proposed Acquisition) from Nusajaya Tech Park Sdn. Bhd. The agreed value of RM27.0 million, negotiated on a willing-buyer willing-seller basis, is in line with the independent market valuation1 of RM28.2 million commissioned by the Trustee.
Marks entry into the high-technology manufacturing sector of the industrial market and further diversifies geographical footprint to Johor
Johor, particularly Iskandar Malaysia, is an attractive investment destination within the manufacturing sector of the industrial market. With its competitive land and labour costs, Iskandar Malaysia has successfully attracted many high-tech and capital-intensive companies to base their operations there, supported by the Johor state government’s business-friendly policies.
Developed by Nusajaya Tech Park Sdn. Bhd.2, Nusajaya Tech Park is a 210-hectare integrated industrial development located at Gerbang Nusajaya in Iskandar Malaysia, Johor. Designed to accommodate a wide range of light to medium industries, it is home to multinational corporations and leading local enterprises from various industries, including aerospace, automotive electronics, precision engineering, IT, e-commerce and data centres. Strategically located within minutes from the Malaysia-Singapore Second Link Expressway, Nusajaya Tech Park offers seamless connectivity to a network of international airports and seaports in both Singapore and Malaysia. This prime location ensures efficient transportation and enables easy access to global markets for businesses operating in the park.
Strengthens income stability of the enlarged portfolio
The Subject Properties consist of two (2) semi-detached factories and one (1) detached factory, with mezzanine offices and guard posts. The factories were completed about seven years ago and feature a sleek, modern frontage with separate loading areas. With an efficient layout and column-free space, the building specifications of the Subject Properties include high floor loading and high ceilings.
With a collective built-up area of 74,142 square feet, the Subject Properties are fully leased to two reputable tenants in the optics and medical sectors, with a weighted average lease to expiry (WALE) of 5.2 years by rental income. The six-year lease terms with built-in rent escalations ranging between 2% and 6% p.a. will provide income stability to the portfolio.
CLMT’s portfolio will be strengthened with the addition of these high-quality industrial properties. Post-transaction, CLMT’s enlarged portfolio will consist of 10 properties with the proportion of industrial and logistics properties increasing from 10% to 11% of the total portfolio net lettable area of approximately 4.4 million square feet.
DPU-accretive acquisition
CLMT intends to finance the Proposed Acquisition through debt. The Proposed Acquisition is expected to generate an annual rental income of RM2.0 million, with a first-year yield of approximately 7.3%. It will contribute positively to CLMT’s income and is distribution per unit accretive to CLMT unitholders on a proforma basis. The Proposed Acquisition is expected to be completed by the fourth quarter of 2024.
Mr Tan Choon Siang, CEO of CMRM, said: “We are pleased to embark on the acquisition of our first industrial properties in Malaysia and expand into the fast-growing state of Johor. Nusajaya Tech Park is highly sought after by multinational corporations due to its favourable geographical location and proximity to Singapore. In addition, Malaysia’s latest New Industrial Master Plan 2030 is set to transform and grow the country’s manufacturing sector including creating high-value job opportunities and developing new and existing clusters. We believe that the southern region of Malaysia, particularly Iskandar Malaysia, will benefit from this initiative. It is also rapidly gaining prominence as an attractive investment destination for global players in sectors such as manufacturing, logistics, healthcare, and financial services.”
“We are confident that the Proposed Acquisition will enable us to gain a foothold in Malaysia’s resilient industrial market and one of its largest economic hubs. This will position CLMT for further growth in 2024 and represents a significant milestone as we accelerate our portfolio reconstitution journey, driving sustainable growth and diversifying our income sources. As the only Malaysia-listed REIT in the CapitaLand Group, CLMT has access to a stable acquisition pipeline that will further enhance our existing portfolio. This includes the Proposed Acquisition and the acquisition of Queensbay Mall from CapitaLand Investment in November 2022. Looking ahead, we remain focused on pursuing growth targeting properties with stable cash flows and strong operating metrics while maintaining financial discipline.”
Summary of Subject Properties
[1] The independent valuation by Nawawi Tie Leung Property Consultants Sdn. Bhd. indicated the market value of the Subject Properties to be RM28.2 million as at 15 January 2024.
[2] The shareholders of Nusajaya Tech Park Sdn. Bhd. are Ascendas Land (Malaysia) Sdn. Bhd., indirectly held by CapitaLand Group Pte. Ltd.; and UEM Land Berhad. CapitaLand Group Pte. Ltd. is an indirect major shareholder of CMRM due to its shareholdings in CapitaLand Investment Limited, the indirect holding company of CMRM.
