Xin Hwa Holdings Bhd has agreed to sell and lease back two plots of land in Pasir Gudang Idustrial Area, Johor, to Axis REIT which include a warehousing facility.
According to a filing, Xin Hwa, which is selling the 6.57 ha property for RM75 million cash, would make a pro forma gain of RM1.08 million.
The sale and purchase agreement was signed by Xin Hwa Trading & Transport Sdn Bhd a wholly-owned subsidiary of Xin Hwa with RHB Trustees Bhd, acting as the trustee for Axis REIT. The RM75 million consideration, according to Xin Hwa, equates to 34.66 sen per share, based on the group’s issued share capital of 216.4 million shares.
The company intends to repay its debts with RM33.9 million, use RM5.75 million for working capital, and set aside RM35 million for potential profitable investment to be determined later.
At the same time, the Xin Hwa unit signed a conditional lease agreement to lease back the property for a period of 10 years at a monthly gross rental of RM406,579 for the first three years, RM430,974 for the subsequent three years and RM456,832 for the remaining four years.
Axis REIT said in a separate statement that the transaction would boost its gearing ratio to 34.5% of total assets by the end of 2020.
The lease agreement comes with an option to renew for another five years.
