Apr 17, 2017: Ascendas Property Fund Trustee Pte has signed a term sheet with Arshiya Ltd, for the proposed acquisition of warehouses, at the Arshiya Free Trade Warehousing Zone. The warehouse is located at Panvel, near JNPT, India.
Going forward, Arshiya aims to achieve an asset light model. After the deal, Ascendas will potentially be getting a portfolio of income yielding Free Trade warehouses. The term sheet also envisages the financing of the development of the available surplus land which has a development potential of approx four million square feet within the existing area.
The value of the deal is expected to be Rs 534 crore, that will be paid in two tranches; the first of the transaction Rs 434 crore will be paid upon signing of a definitive agreement and the balance Rs 100 crore over the next four years on achieving certain milestones. The majority of the monetisation proceeds will be used by Arshiya for clearing a part of its dues to creditors and repayment of other liabilities post debt restructuring. All the six warehouses will be leased back under a master lease arrangement with Arshiya Group.
Arshiya has two revenue streams from its clients, one being from rent and the other from value added services in the ratio of approximately 1:1. Arshiya rental income would be significantly higher than the rental payout under the sale and leaseback transaction and leave a surplus that would be retained by Arshiya. In addition, Arshiya would also benefit from the entire income from value added services.