AIMS Financial Group

AIMS AMP Capital Industrial REIT announces significant redevelopment of 20 Gul Way, Singapore

07.26.2011

AIMS AMP Capital Industrial REIT Management Limited as Manager of AIMS AMP Capital Industrial REIT (AIMSAMPIREIT or the Trust) is pleased to announce the significant redevelopment of 20 Gul Way, Singapore.

The Manager has negotiated vacant possession of the site with the existing occupier allowing for a comprehensive redevelopment of the site including the construction of a five storey ramp up warehouse. The new warehouse will be constructed in two phases, and is targeted for completion by December 2013. Mr Nicholas McGrath, Chief Executive Officer of the Manager, said: “This exciting project is a demonstration of the Manager's ability to execute on our strategy for improving value through selective enhancement of existing assets. The project unlocks value for unitholders by redeveloping the site with a clear focus on minimising risk through a fixed price turnkey contract with a leading warehouse developer and securing a long term master lease for the entire warehouse with a high quality tenant.”

Key highlights

Development unlocks value inherent in site, lifting built up plot ratio from the current 0.46 up to the maximum of 1.40.
Value on completion of S$214.0 million, up from a current book value of S$41.8 million, increasing the total portfolio size to S$1.03 billion.
Risk minimised development of five storey ramp up warehouse in partnership with CWT Limited, which is committing to a master lease on the completed buildings, and Indeco Engineers Pte Ltd (Indeco), a wholly owned subsidiary of CWT Limited, which is entered into a fixed price turnkey design and construct (D&C) contract.
Total redevelopment costs (excluding land) of S$155.0 million funded from internal resources and committed debt facility at pricing more competitive than the Trust's existing loan facilities.
Upon completion, the redevelopment of 20 Gul Way will have a positive impact on NAV and annual DPU of 0.7¹ cents and 0.293² cents, respectively, on a fully debt funded basis.

Artis's impression of the proposed five storey ramp up warehouse at 20 Gul Way

Mr Nicholas McGrath continued: “We are delighted to enter into this redevelopment transaction with CWT Limited and its subsidiary, Indeco Engineers Pte Ltd. CWT Limited is one of the largest listed logistics operators in Southeast Asia and an acknowledged market leader in the development and management of ramp up warehouses in Singapore. We look forward to a long and successful partnership with CWT Limited.”

“Our focus continues on identifying properties in the REIT's portfolio which have growth potential through repositioning, enhancement or redevelopment. The opportunity for 20 Gul Way was to unlock the development potential on the site by redeveloping the site up to the maximum plot ratio. By structuring the development with a fixed price turnkey D&C contract with Indeco Engineers Pte Ltd and a long term master lease with CWT Limited, the Manager has sought to deliver superior returns for investors on a significantly de-risked basis.”

“The funding for the development will be a mixture of internal resources and a committed S$150.0 million debt facility from the Trust's relationship lenders SCB, UOB, ING and CBA. The Manager is very pleased to secure the strong support of the Trust's lenders at pricing which is more competitive than the Trust's existing facilities,” Mr McGrath concluded.

This project is strategically located in the west within the Jurong Industrial Estate and easily accessible to major expressways, including the Ayer Rajah Expressway and Pan Island Expressway. To be redeveloped over two phases, the redevelopment at 20 Gul Way will have a combined gross floor area of 1,159,536 sq ft on a land area of 828,248 sq ft. The first phase of 671,289 sq ft plus ramp is expected to be completed by November 2012 and the second phase of 488,247 sq ft is expected to be completed by December 2013. The total project redevelopment cost (excluding land) of this project is estimated at about S$155.0 million.

¹ Assuming AIMSAMPIREIT had on 31 March 2011 completed the proposed redevelopment and drawndown S$155 million to finance the proposed redevelopment

² Please note that the DPU impact shown in this announcement is for illustration purposes only and purely on a pro forma basis based on the assumption that AIMSAMPIREIT had completed, held and operated the proposed redevelopment for the whole of the financial year ended 31 March 2011 and the proposed redevelopment was funded using 100% debt, based on units in issue as at 31 March 2011 of 2,207,064,174 units.

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