Sanli Environmental has proposed to acquire 22 Chin Bee Drive, one of the properties of ESR-LOGOS REIT J91U (E-LOG) for $13.8 million.
The company’s wholly-owned subsidiary, entered into a sale and purchase agreement (SPA) with Perpetual (Asia), in its capacity as trustee of ESR-LOGOS REIT (E-LOG REIT) on June 19 in respect of the purchase.
The property is held by E-LOG on a 30-year lease granted by Jurong Town Corporation (JTC) as the head lessor commencing from Sept 16, 2005. The lease will expire on Sept 15, 2035.
The property is a four-storey single-user warehouse building with a six-storey ancillary office and a five-storey annexe building with a workers’ dormitory. It has a net lettable area (NLA) of 11,209 sqm (120,652.672 sq ft).
The property’s open market valuation was $13.8 million as at May 10, according to Centuray 99, which was appointed by Sanli Environmental 1E3 to conduct an independent valuation on the property.
According to Sanli Environmental, Sanli M&E has been leasing the property from E-LOG since March 15 under the lease agreement dated March 16. Under the terms of the SPA, the lease agreement will be deemed terminated. The property, along with the plant and equipment, will be deemed to have been given to Sanli M&E.
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The company means to acquire the property to consolidate its corporate office and workshops and house its foreign workers in a centralised location. This will also allow its management’s oversight of all the business units of the company, increase operational efficiencies, lower the overall operating costs and reduce reliance on the dormitory facilities provided by third parties, says Sanli Environmental.
The consideration of the property was arrived at on a willing-buyer willing-seller basis, after taking into the open market value of the Property based on the valuation report dated May 10.
The acquisition will be funded through internal resources and bank borrowings.
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Sanli M&E has since paid 1% of the consideration with GST, at $149,040, as a deposit of good faith. The company will pay a further deposit of 9% of the consideration, or $1.24 million, within five business days of the SPA.
The balance will be paid upon the completion of the acquisition.
The SPA is conditional upon JTC’s approval that it has no objection to the transaction among other conditions. The acquisition will be completed around four weeks from JTC’s approval or another mutually-agreed-upon date.
On a pro forma basis, if the acquisition had been affected on April 1, 2021, Sanli Environmental’s earnings per share (EPS) for the FY2022 ended March 31, 2022, would have been at 0.19 cents, down from 0.67 cents originally. The company’s gearing would also increase to 0.59x on a pro forma basis, compared to 0.20x.
Shares in Sanli Environmental closed 0.3 cents higher or 2.83% up at 10.9 cents on June 19.
