AXIS REAL ESTATE INVESTMENT TRUST (“AXIS” OR THE “FUND”) PROPOSED ACQUISITION BY AXIS OF A PROPERTY KNOWN AS KOMPLEKS KEMAJUAN HELD UNDER PN 3940, LOT 24, TOWN OF PETALING JAYA, DISTRICT OF PETALING, SELANGOR (“KOMPLEKS KEMAJUAN”) FROM AUSTRAL AMAL PROPERTIES SDN BHD (“AUSTRAL AMAL”), FOR A CASH CONSIDERATION OF RM29.0 MILLION (“PROPOSED ACQUISITION OF KOMPLEKS KEMAJUAN”); AND PROPOSED ACQUISITION BY AXIS OF A PROPERTY KNOWN AS KEYANGAN DEPOT HELD UNDER H.S.(D) 22390 FOR P.T. 61, SECTION 15, TOWN OF SHAH ALAM, DISTRICT OF PETALING, SELANGOR (“KEYANGAN DEPOT”) FROM JUTA BINA SDN BHD (“JUTA BINA”) FOR A CASH CONSIDERATION OF RM16.1 MILLION (“PROPOSED ACQUISITION OF KEYANGAN DEPOT”) (COLLECTIVELY REFERRED TO AS “PROPOSED ACQUISITIONS”)
| AXIS REAL ESTATE INVESTMENT TRUST |
|
Type | Announcement |
| Subject | AXIS REAL ESTATE INVESTMENT TRUST (“AXIS” OR THE “FUND”) PROPOSED ACQUISITION BY AXIS OF A PROPERTY KNOWN AS KOMPLEKS KEMAJUAN HELD UNDER PN 3940, LOT 24, TOWN OF PETALING JAYA, DISTRICT OF PETALING, SELANGOR (“KOMPLEKS KEMAJUAN”) FROM AUSTRAL AMAL PROPERTIES SDN BHD (“AUSTRAL AMAL”), FOR A CASH CONSIDERATION OF RM29.0 MILLION (“PROPOSED ACQUISITION OF KOMPLEKS KEMAJUAN”); AND PROPOSED ACQUISITION BY AXIS OF A PROPERTY KNOWN AS KEYANGAN DEPOT HELD UNDER H.S.(D) 22390 FOR P.T. 61, SECTION 15, TOWN OF SHAH ALAM, DISTRICT OF PETALING, SELANGOR (“KEYANGAN DEPOT”) FROM JUTA BINA SDN BHD (“JUTA BINA”) FOR A CASH CONSIDERATION OF RM16.1 MILLION (“PROPOSED ACQUISITION OF KEYANGAN DEPOT”) (COLLECTIVELY REFERRED TO AS “PROPOSED ACQUISITIONS”) |
Contents :
1. INTRODUCTION
Commerce International Merchant Bankers Berhad, on behalf of the Board of Directors (“Board”) of Axis REIT Managers Berhad (“ARMB”), the management company of Axis, wishes to announce that OSK Trustees Berhad (“OSK”), the trustee of Axis, has entered into the following agreements in relation to the Proposed Acquisitions on behalf of Axis:
1.1 Proposed Acquisition of Kompleks Kemajuan
OSK, Austral Amal and Kasturi Gemilang Sdn Bhd (“Kasturi Gemilang”) have on 2 December 2005 entered into a deed of novation (“Kompleks Kemajuan Deed of Novation”) for the novation of the sale and purchase agreement dated 16 September 2005 entered into between Austral Amal and Kasturi Gemilang for the proposed acquisition of Kompleks Kemajuan by Kasturi Gemilang from Austral Amal (“Kompleks Kemajuan SPA”).
Pursuant to the Kompleks Kemajuan Deed of Novation, the parties agreed to the novation of all of Kasturi Gemilang’s rights, titles, benefits, interest, liabilities and obligations as purchaser under the Kompleks Kemajuan SPA and in respect of Kompleks Kemajuan, to OSK, on behalf of Axis, upon the terms and subject to the conditions in the Kompleks Kemajuan Deed of Novation.
In addition to the Kompleks Kemajuan Deed of Novation, OSK and Kasturi Gemilang have on 2 December 2005 entered into a supplemental agreement (“Kompleks Kemajuan Supplemental Agreement”) to the Kompleks Kemajuan Deed of Novation. The Kompleks Kemajuan Supplemental Agreement provides for the reimbursement by OSK of certain costs and expenses incurred by Kasturi Gemilang in connection with the Kompleks Kemajuan SPA and the Kompleks Kemajuan Deed of Novation.
1.2 Proposed Acquisition of Keyangan Depot
OSK, Juta Bina and Evergreen Landmark Sdn Bhd (“Evergreen Landmark”) have on 2 December 2005 entered into a deed of novation (“Keyangan Depot Deed of Novation”) for the novation of the sale and purchase agreement dated 15 September 2005 entered into between Juta Bina and Evergreen Landmark for the proposed acquisition of Keyangan Depot by Evergreen Landmark from Juta Bina (“Keyangan Depot SPA”).
Pursuant to the Keyangan Depot Deed of Novation, the parties agreed to the novation of all of Evergreen Landmark’s rights, titles, benefits, interest, liabilities and obligations as purchaser under the Keyangan Depot SPA and in respect of Keyangan Depot, to OSK, on behalf of Axis, upon the terms and subject to the conditions in the Keyangan Depot Deed of Novation.
In addition to the Keyangan Depot Deed of Novation, OSK and Evergreen Landmark have on 2 December 2005 entered into a supplemental agreement (“Keyangan Depot Supplemental Agreement”) to the Keyangan Depot Deed of Novation. The Keyangan Depot Supplemental Agreement provides for the reimbursement by OSK of certain costs and expenses incurred by Evergreen Landmark in respect of the Keyangan Depot SPA and the Keyangan Depot Deed of Novation.
Pursuant to the deed of trust dated 15 June 2005 constituting Axis, entered into between OSK and ARMB (“Axis Deed”), OSK, as the trustee of Axis, has approved the Proposed Acquisitions, vide their letter dated 2 December 2005.
2. DETAILS OF THE PROPOSED ACQUISITION OF KOMPLEKS KEMAJUAN
2.1 Salient terms and conditions of the Proposed Acquisition of Kompleks Kemajuan
(i) Pursuant to the Kompleks Kemajuan Deed of Novation and in consideration of OSK, on behalf of the Fund, agreeing to purchase Kompleks Kemajuan from Austral Amal in place of Kasturi Gemilang, Austral Amal irrevocably agrees to the novation, transfer and assignment of all of Kasturi Gemilang’s rights, titles, benefits, interest, liabilities and obligations under the Kompleks Kemajuan SPA and in respect of Kompleks Kemajuan, to OSK absolutely with effect from the date of the Kompleks Kemajuan Deed of Novation.
(ii) The total cash consideration for Kompleks Kemajuan of RM29.0 million (“Kompleks Kemajuan Purchase Price”) is payable in the following manner:
- (a) A total sum of RM2,900,000, being deposit and towards part payment of the Kompleks Kemajuan Purchase Price (“Kasturi Deposit”) has been paid by Kasturi Gemilang to Pengurusan Danaharta Nasional Berhad (“Chargee”) on account of Austral Amal. The Chargee holds a charge on Kompleks Kemajuan.
Under the terms of the Kompleks Kemajuan Deed of Novation, the Kasturi Deposit paid by Kasturi Gemilang shall be transferred to the account of OSK, on behalf of the Fund, and be deemed paid by OSK to Austral Amal instead of Kasturi Gemilang. Pursuant to the Kompleks Kemajuan Supplemental Agreement, OSK will reimburse Kasturi Gemilang a sum equivalent to the Kasturi Deposit paid by Kasturi Gemilang; and
(b) Pursuant to the Kompleks Kemajuan Deed of Novation and Kompleks Kemajuan SPA, the balance of the purchase consideration amounting to RM26,100,000 shall be paid by OSK to the Chargee on or before 16 December 2005 towards the final payment of the Kompleks Kemajuan Purchase Price and the redemption of Kompleks Kemajuan from the Chargee. Receipt by the Chargee of the said balance purchase consideration shall be deemed payment of the Kompleks Kemajuan Purchase Price to Austral Amal.
(iii) Kompleks Kemajuan shall be acquired by OSK free from all encumbrances subject to the existing tenancies as set out in the Kompleks Kemajuan SPA and all conditions of title and restrictions in interest whether express or implied and the existing category of land use affecting the title to Kompleks Kemajuan. Legal possession of Kompleks Kemajuan shall be deemed delivered by Austral Amal to OSK on the date of the receipt of the balance purchase consideration by the Chargee as described above.
(iv) Pursuant to the terms of the Kompleks Kemajuan Supplemental Agreement, OSK, on behalf of the Fund, will:
(a) reimburse to Kasturi Gemilang a sum equivalent to the Kasturi Deposit previously paid by Kasturi Gemilang together with interest calculated at the rate of 7.75% per annum thereon for the period commencing from the date of payment of the Kasturi Deposit by Kasturi Gemilang under the Kompleks Kemajuan SPA until the reimbursement of the Kasturi Deposit to Kasturi Gemilang by OSK; and
(b) pay for Kasturi Gemilang’s legal costs, stamp duties and other incidental expenses in relation thereto.
2.2 Information on Kompleks Kemajuan
Kompleks Kemajuan is a five (5) storey office/showroom cum warehouse complex with basement car park situated at No. 2, Jalan 19/1B, 46300 Petaling Jaya, Selangor and sited on a leasehold land held under PN 3940, Lot 24, Town of Petaling Jaya, District of Petaling, Selangor with a land area of 87,972 sq. ft.. The tenure of the lease is ninety-nine (99) years expiring on 4 July 2065. Kompleks Kemajuan is approximately twelve (12) years old. It has a gross built up area of 318,614 sq. ft. (include basement car park), net lettable area of 201,414 sq. ft. and has one hundred and sixty-eight (168) car park bays. The category of land use is industrial. Currently, Kompleks Kemajuan has an occupancy rate of 72.8%. The current average gross rental rate for the tenanted office space is approximately RM2.20 per square feet (“sq. ft”) per month and for the tenanted warehouse space is approximately RM1.39 per sq. ft per month.
2.3 Basis of the Kompleks Kemajuan Purchase Price
The purchase consideration for Kompleks Kemajuan was arrived at based on a willing-buyer willing-seller basis after taking into account the market value of Kompleks Kemajuan of RM36.2 million as appraised by C H Williams Talhar & Wong Sdn Bhd, an independent firm of registered valuers in its valuation report dated 22 November 2005. The valuation of RM36.2 million was arrived at using a combination of comparison and investment methods of valuation.
2.4 Source of funding
The Proposed Acquisition of Kompleks Kemajuan will be funded by a combination of bank borrowings and internally generated funds.
3. DETAILS OF THE PROPOSED ACQUISITION OF KEYANGAN DEPOT
3.1 Salient terms and conditions of the Proposed Acquisition of Keyangan Depot
(i) Pursuant to the Keyangan Depot Deed of Novation and in consideration of OSK, on behalf of the Fund, agreeing to purchase Keyangan Depot from Juta Bina in place of Evergreen Landmark, Juta Bina irrevocably agrees to the novation, transfer and assignment of all of Evergreen Landmark’s rights, titles, benefits, interest, liabilities and obligations under the Keyangan Depot SPA and in respect of Keyangan Depot, to OSK absolutely with effect from the date of the Keyangan Depot Deed of Novation.
(ii) The total cash consideration for Keyangan Depot of RM16.1 million (“Keyangan Depot Purchase Price“) is payable in the following manner:
(a) A total sum of RM1,610,000, being deposit and towards part payment of the Keyangan Depot Purchase Price (“Evergreen Deposit”) has been paid by Evergreen Landmark to Juta Bina’s solicitors (“Juta Bina’s Solicitors”) as stakeholders. Juta Bina shall apply for and obtain the consent of the State Authority for the transfer of Keyangan Depot from Juta Bina to OSK, on behalf of the Fund (“Consent to Transfer”). Juta Bina’s Solicitors will release the Evergreen Deposit to Juta Bina when Juta Bina has obtained the Consent to Transfer.
Under the terms of the Keyangan Depot Deed of Novation, the Evergreen Deposit paid by Evergreen Landmark shall be transferred to the account of OSK, on behalf of the Fund, and be deemed paid by OSK to Juta Bina instead of Evergreen Landmark. Pursuant to the Keyangan Depot Supplemental Agreement, OSK will reimburse Evergreen Landmark a sum equivalent to the Evergreen Deposit paid by Evergreen Landmark; and
(b) Pursuant to the Keyangan Depot Deed of Novation and Keyangan Depot SPA, the balance of the purchase consideration amounting to RM14,490,000 shall be paid by OSK to Juta Bina’s Solicitors as stakeholders within one (1) month from the date on which OSK’s solicitors receive the Consent to Transfer (“Completion Period”). Receipt by Juta Bina’s Solicitors of the said balance purchase consideration shall be deemed payment of the Keyangan Depot Purchase Price to Juta Bina.
(iii) Under the Keyangan Depot SPA, the sale and purchase of Keyangan Depot shall be conditional upon:
(a) Juta Bina obtaining the Consent to Transfer within six (6) months from 15 September 2005, being the date of the Keyangan Depot SPA (“Approval Period”). If the Consent to Transfer cannot be obtained within the Approval Period, OSK shall have the absolute discretion to extend the Approval Period for a further three (3) months from the expiry of the Approval Period; and
(b) OSK obtaining the consent of the State Authority for the charging of Keyangan Depot in favour of its lender in the event OSK secures a loan to finance the acquisition of Keyangan Depot, within the Completion Period.
(iv) Keyangan Depot shall be acquired by OSK free from all encumbrances subject to the existing tenancies as set out in the Keyangan Depot SPA and all conditions of title and restrictions in interest whether express or implied and the existing category of land use affecting the title to Keyangan Depot. Legal possession of Keyangan Depot shall be deemed delivered by Juta Bina to OSK on the date of the receipt of the balance purchase consideration by Juta Bina’s Solicitors as described above.
(v) Pursuant to the terms of the Keyangan Depot Supplemental Agreement, OSK, on behalf of the Fund, will:
(a) reimburse to Evergreen Landmark a sum equivalent to the Evergreen Deposit previously paid by Evergreen Landmark together with interest calculated at the rate of 7.75% per annum thereon for the period commencing from the date of payment of the Evergreen Deposit by Evergreen Landmark under the Keyangan Depot SPA until the reimbursement of the Evergreen Deposit to Evergreen Landmark by OSK; and
(b) pay for Evergreen Landmark’s legal costs, stamp duties and other incidental expenses in relation thereto.
3.2 Information on Keyangan Depot
Keyangan Depot is a three (3) storey office cum warehouse complex with one hundred and thirteen (113) car park bays situated at No. 3, Jalan 15/16, Section 15, 40200 Shah Alam, Selangor and sited on a leasehold land held under H.S.(D) 22390, P.T. 61, Section 15, Town of Shah Alam, District of Petaling, Selangor with a land area of 132,697 sq. ft.. The tenure of the lease is ninety-nine (99) years expiring on 12 January 2086. Keyangan Depot is approximately thirteen and a half (13.5) years old. It has a gross built up area of 169,194 sq. ft. and net lettable area of 162,206 sq. ft.. The category of land use is industrial. Currently, Keyangan Depot has an occupancy rate of 100%. The current average gross rental rate for the tenanted office space is approximately RM0.97 per sq. ft per month and for the tenanted warehouse space is approximately RM0.89 per sq. ft per month.
3.3 Basis of the Keyangan Depot Purchase Price
The purchase consideration for Keyangan Depot was arrived at based on a willing-buyer willing-seller basis after taking into account the market value of Keyangan Depot of RM18.2 million as appraised by C H Williams Talhar & Wong Sdn Bhd, an independent firm of registered valuers in its valuation report dated 22 November 2005. The valuation of RM18.2 million was arrived at using a combination of comparison and investment methods of valuation.
3.4 Source of funding
The Proposed Acquisition of Keyangan Depot will be funded by a combination of bank borrowings and internally generated funds.
4. INFORMATION ON THE VENDORS
4.1 Austral Amal
Austral Amal is a private company incorporated in Malaysia under the Companies Act, 1965 (“Act”) on 5 June 1995. As at 8 November 2005, the authorised share capital of Austral Amal is RM100,000 comprising 100,000 ordinary shares of RM1.00 each, of which RM2 comprising 2 ordinary shares of RM1.00 each have been issued and fully paid-up.
The directors of Austral Amal are Dato’ Faruk bin Othman, Dato’ Yaacob bin Md Amin, Lim Hong Sang, Sydney Lim Tau Chin and Chin Yok Koon. Austral Amal is a wholly owned subsidiary of Furqan Business Organisation Bhd.
4.2 Juta Bina
Juta Bina is a private company incorporated in Malaysia under the Act on 30 July 1985. As at 1 April 2005, the authorised share capital of Juta Bina is RM8,400,000 comprising 8,400,000 ordinary shares of RM1.00 each all of which have been issued and fully paid-up.
The directors of Juta Bina are Kamarudin bin Md Nor and Vaseehar Hassan bin Abdul Razack. Juta Bina is a wholly owned subsidiary of Dallah Al Baraka (Malaysia) Holdings Sdn Bhd.
5. INFORMATION ON KASTURI GEMILANG AND EVERGREEN LANDMARK
5.1 Kasturi Gemilang
Kasturi Gemilang is a private company incorporated in Malaysia under the Act on 19 September 1992. Kasturi Gemilang is principally involved in property investment.
As at 1 December 2005, the authorised share capital of Kasturi Gemilang is RM1,000,000 comprising 1,000,000 ordinary shares of RM1.00 each, all of which have been issued and fully paid-up.
The directors of Kasturi Gemilang are Dato’ Abas Carl Gunnar bin Abdullah, Lim Kian Thiam, Alex Lee Lao and George Stewart LaBrooy. The substantial shareholders of Kasturi Gemilang and their respective shareholdings in Kasturi Gemilang as at 1 December 2005 are set out in Table 1.
5.2 Evergreen Landmark
Evergreen Landmark is a private company incorporated in Malaysia under the Act on 8 January 1993. Evergreen Landmark is principally involved in property investment holding.
As at 1 December 2005, the authorised share capital of Evergreen Landmark is RM5,000,000 divided into 1,000,000 ordinary shares of RM1.00 each and 4,000,000 redeemable preference shares of RM1.00 each. As at 1 December 2005, the issued and paid-up share capital of Evergreen Landmark is RM4,083,380 comprising 500,000 ordinary shares of RM1.00 each and 3,583,380 redeemable preference shares of RM1.00 each.
The directors of Evergreen Landmark are Lai Sau Wai and Lim Kian Meng. The substantial shareholders of Evergreen Landmark and their respective shareholdings in Evergreen Landmark as at 1 December 2005 are set out in Table 2.
6. RATIONALE FOR THE PROPOSED ACQUISITIONS
ARMB, the management company of Axis, aims to provide Unitholders with stable distribution and to achieve growth in net asset value per unit of the Fund through, inter-alia, selectively acquiring properties that meet its investment criteria. The purchase consideration for the Proposed Acquisitions are at a discount to the respective appraised values of each of the properties and the Proposed Acquisitions will be accretive to Axis’ distributable income. ARMB believes that by leveraging on its pro-active asset and lease management capabilities, there will be further opportunities to asset enhance and improve the tenant mix of Kompleks Kemajuan and Keyangan Depot (“Properties”) and thereby improving the gross revenue and net property income of these Properties.
7. EFFECTS OF THE PROPOSED ACQUSITIONS
7.1 Unit Capital and Substantial Unitholders’ Unitholding
The Proposed Acquisitions will not have any effect on the total units in issue and substantial unitholders’ unitholding of Axis as the purchase consideration will be paid entirely in cash.
7.2 Net Asset Value
The net asset value of Axis is expected to increase by approximately RM8.95 million with the revaluation surplus arising as a result of the Proposed Acquisitions (net of incidental costs incurred pursuant to the Proposed Acquisitions). The revaluation surplus arises from the acquisition of the Properties below the open market value as supported by the valuation reports dated 22 November 2005 prepared by C H Williams Talhar & Wong Sdn Bhd, an independent firm of registered valuers.
7.3 Earnings
The Proposed Acquisitions are not expected to have any material effect on the earnings of Axis for the financial year ending 31 December 2005 as the Proposed Acquisition of Kompleks Kemajuan is expected to be completed by mid December 2005 whereas the Proposed Acquisition of Keyangan Depot is expected to be completed by the first quarter of 2006. However, the Proposed Acquisitions are expected to contribute positively to the future earnings of Axis.
7.4 Gearing
Axis intends to raise debt facility of approximately RM21.5 million. Upon completion of the Proposed Acquisitions, Axis’ gearing ratio will be 16% based on the unaudited total assets of Axis as at 30 September 2005 of RM321.4 million and the value of the Properties. The said gearing ratio is below the gearing limit of 35% prescribed by the Guidelines on Real Estate Investment Trusts issued by the SC (“Reit Guidelines”).
8. APPROVALS REQUIRED FOR THE PROPOSED ACQUISITIONS
The Proposed Acquisitions are conditional upon approvals being obtained from the following:
(i) the State Authority, in respect of the Proposed Acquisition of Keyangan Depot;
(ii) any other relevant authorities, if required.
Pursuant to the Reit Guidelines, the valuations set out in Sections 2.3 and 3.3 are not subject to approval by the Securities Commission.
9. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS
Save as disclosed below, ARMB is not aware of any other Directors and substantial shareholders of ARMB and persons connected with them who have any interest, direct or indirect, in the Proposed Acquisitions:
(i) Dato’ Abas Carl Gunnar bin Abdullah is a Director and substantial shareholder of ARMB through Axis Equities Sdn Bhd (“AESB”). He is also a Director and substantial shareholder of Kasturi Gemilang through AESB. In addition, he is a substantial shareholder of Evergreen Landmark through AESB;
(ii) Stephen Tew Peng Hwee is a Director and substantial shareholder of ARMB through Pet Resins (M) Sdn Bhd (“PRSB”). He also has direct equity interest in Evergreen Landmark;
(iii) Lim Kian Thiam is a Director and substantial shareholder of ARMB through AESB and PRSB. He is also a Director and substantial shareholder of Kasturi Gemilang through AESB and Pet Films (M) Sdn Bhd (“PFSB”). In addition, he is a substantial shareholder of Evergreen Landmark through AESB. He also has direct equity interest in Evergreen Landmark; and
(iv) AESB is a substantial shareholder of ARMB through T.S. Property Development Sdn Bhd. It also has direct equity interest in Kasturi Gemilang. In addition, it is a substantial shareholder of Evergreen Landmark through Tahir Suria Equities Sdn Bhd.
The shareholdings of Dato’ Abas Carl Gunnar bin Abdullah, Stephen Tew Peng Hwee, Lim Kian Thiam and AESB in ARMB as at 1 December 2005 are set out in Table 3.
10. ESTIMATED TIMEFRAME FOR COMPLETION
Barring any unforeseen circumstances, the Proposed Acquisition of Kompleks Kemajuan is expected to be completed on or before 16 December 2005 whereas the Proposed Acquisition of Keyangan Depot is expected to be completed by the first quarter of 2006.
11. DOCUMENTS FOR INSPECTION
The following documents are available for inspection at the registered office of ARMB at Suite 11.1A, Level 11, Menara Weld, 76 Jalan Raja Chulan, 50200 Kuala Lumpur during normal office hours from Monday to Friday (except on public holidays) for a period of three (3) months from the date of this announcement:
(i) Kompleks Kemajuan SPA;
(ii) Keyangan Depot SPA;
(iii) Kompleks Kemajuan Deed of Novation;
(iv) Keyangan Depot Deed of Novation;
(v) Kompleks Kemajuan Supplemental Agreement;
(vi) Keyangan Depot Supplemental Agreement;
(vii) Valuation report on Kompleks Kemajuan prepared by C H Williams Talhar & Wong Sdn Bhd dated 22 November 2005; and
(viii) Valuation report on Keyangan Depot prepared by C H Williams Talhar & Wong Sdn Bhd dated 22 November 2005.
To view the table/image, please refer to the attachment.
This announcement is dated 2 December 2005.
Announcement Info
| Company Name | AXIS REAL ESTATE INVESTMENT TRUST |
| Stock Name | AXREIT |
| Date Announced | 2 Dec 2005 |
| Category | General Announcement |
| Reference No | KK-051202-70518 |
