KUALA LUMPUR: Axis Real Estate Investment Trust (Axis-REIT) is set to build an industrial manufacturing facility for England-based Upeca Aerotech Sdn Bhd (Upeca) with total development cost of RM74.16 million.
This follows the successful signing of a sub-lease agreement with Malaysia Airports Holdings Bhd (MAHB), via its trustee RHB Trustees Bhd, to lease said 7.02 acres of vacant land in the proposed Malaysia International Aerospace Centre (MIAC) Technology Park for RM19.9 million.
The completion of the sub-lease is expected to be finalised by end of this year, while the development of the industrial manufacturing facility is expected to take a year to complete and will be ready for handover to Upeca by 15 December 2018.
This manufacturing facility will serve the operations for Upeca’s manufacturing, storage and distribution of aerospace parts.
Upeca, whose parent company Senior Plc is listed on the London Stock Exchange, has also committed to a lease of 20 years plus option to renew for a further two terms of six years each.
The acquisition is part of Axis-REIT’s overall organic growth strategy to develop “build to suit” industrial facilities and as such, the land will be used for the development of a single storey manufacturing plant cum office building with a gross built up area of approximately 178,978.60 sq ft including ancillary buildings and external elements.
“We are extremely pleased to embark on our second built-to-suit development for the Fund with a contracted long-term lease of 20 years at MIAC, Subang,” said chief executive officer of Axis REIT Managers Bhd, Leong Kit May in a statement.
“Our skills to undertake ‘build-to-suit” development will enable the REIT to generate positive investment returns and create the pipeline of growth for the fund.”
The gearing ratio of Axis-REIT after the proposed development is expected to increase from 34.78 per cent (as at 31 December 2016) to 36.87 per cent which will be below the permissible threshold of 50 per cent.
The lease tenure from MAHB will run for 49 year, to expire on 30 December 2066.