CIT to build ramp-up warehouse at 3 Pioneer Sector 3 Singapore

AEI increases GFA by 303,753 sqft.

In a release, Cambridge Industrial Trust Management Limited, as manager of Cambridge Industrial Trust (CIT) announced that RBC Investor Services Trust Singapore Limited, in its capacity as trustee of CIT (Trustee) has on 10 May 2013 entered into a conditional transaction agreement with, among other parties, CWT Limited (CWT) a company listed on the Main Board of Singapore Exchange Securities Trading Limited (SGX-ST), relating to the design and construction of a new four storey ramp up warehouse facility (estimated to have a gross floor area of approximately 315,411 square feet (subject to survey)), at part of the property at 3 Pioneer Sector 3 Singapore 628342.

The Development is initiated by the Manager as part of CIT’s asset enhancement strategy. Under the Transaction Agreement, subject to the conditions thereunder being fulfilled or waived, various agreements will be concluded for the design and construction of the Ramp-Up Warehouse, which will be leased to CWT upon completion. The Manager understands that CWT is in the business of providing warehousing and logistic services and engineering services.

The Ramp-Up Warehouse is expected to be completed by December 2014, within 15 months of the commencement of the design and construction works. When completed, the total gross floor area for the Property (comprising the existing warehouse and the Ramp-Up Warehouse) will be approximately 716,571 square feet (subject to survey).

Based on the estimated total development cost of S$45.4 million, the Year 1 rental under the agreement for lease between CIT and CWT (as described in paragraph 4.1.2 below) reflects a yield on cost of approximately 9.20%.

The Manager believes that the Proposed Transactions (as defined below) will bring the following key benefits to Unitholders. First, the Development of the Property allows the Manager to unlock value for CIT by materially increasing gross floor area of the Property by approximately 303,753 square feet and thus maximise the plot ratio from its existing 0.81 to 1.40. Second, this initiative also provides an opportunity to upgrade and modernise the Property, with the leasing and investment market currently experiencing a strong preference for modern ramp up logistic warehouse accommodation. The Manager understands that the tenant for the proposed development, CWT, is a leading solutions provider of integrated logistics and supply chain management with 40 years of logistic heritage. This is consistent with the Manager’s policy to continuously grow organically within the portfolio by implementing strategic asset enhancement initiatives.

Third, assuming that CIT had (i) completed the Proposed Transactions on 1 January 2012, (ii) incurred additional borrowings of S$45.4 million on 1 January 2012 to finance the Development and (iii) held and operated the Ramp-Up Warehouse for the whole of the financial year ended 31 December 2012, the pro forma DPU impact is approximately +0.2041 cents per annum.

The Property currently comprises an industrial distribution facility, incorporating an existing three-level warehouse building, in addition to a substantial hardstand area for container storage with a total gross floor area of approximately 412,818 square feet on a land area of approximately 511,836 square feet. The Property is located within the Jurong Industrial Estate, approximately 25 km from the city centre at Raffles Place. It is well-served by major arterial roads/expressways such as Jalan Ahmad Ibrahim, Ayer Rajah Expressway and the Pan-Island Expressway.

In order to facilitate the Development, the Trustee will terminate the current lease agreement with Jurong Districentre Pte Ltd (“JDPL”) as master tenant in respect of the Property and enter into direct leases with the existing sub-tenants of the Property, and lease the remaining space to return the Property to full occupancy. As at the date of this announcement, the existing warehouse is 100% occupied.