Complete Property Market Updates of Singapore

July 2, 2008

CWT in for $85.7m gain from warehouse deal

Filed under: Commercial,General,Property Deal — Propertymarketupdates @ 4:24 am

LOGISTICS group CWT Ltd stands to realise a gain of $85.7 million from the sale of one of its biggest warehouse facilities in Singapore.

The company yesterday said it has entered into a conditional agreement with a buyer to sell and lease back its newly-completed Logistics Hub 2 in Tanjong Penjuru.

CWT did not disclose the name of the purchaser but said it is a ‘property fund’ focusing on the Asia-Pacific region. The sale price for the proposed transaction is $115.2 million.

Upon completing the sale, CWT will lease back the building for five years with an option for an additional three-year period.

The firm said in a statement it expects to realise a gain of about $85.7 million from the transaction, based on the aggregate net book value of $28.1 million.

Of the gain, $55.5 million will be recognised as a one-time gain and the balance of $30.2 million will be accounted as a deferred gain to match off against the leaseback commitment.

To illustrate the financial impact, CWT said profit attributable to shareholders in FY2007 after the sale and leaseback would be $90.29 million, compared with $34.79 million before the transaction.

CWT said it plans to use the proceeds to reduce its bank borrowings, to fund its local and regional expansion, and for working capital.

The deal is subject to the approval of JTC and company shareholders. In addition, due to the nature of the warehouse, CWT must complete an environmental baseline study and submit the results to JTC and other relevant parties before the sale can go through.

The company currently owns two integrated logistics hubs in Tanjong Penjuru, which combine to provide nearly 850,000 sq ft of warehouse space for handling hazardous materials and chemical goods.

Both facilities were launched in March this year following an investment of more than $80 million.

Source : Business Times – 4 Jun 2008

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