Boustead / Ausgroup

Boustead / Ausgroup: Boustead has proposed to acquire the property at 36 Tuas Road, an industrial workshop with ancillary office, with an area of approx 29.9k sm, in a sale and lease-back transaction from Ausgroup. The property is held under a lease issued by JTC for a 30 + 30 yr term commencing 1995. The purchase price of the property is $39.4m vs the open mkt valuation of $44.6m, based on Colliers valuation. Based on FYMar13 numbers, the pro forma financial effects of the acquisition will increase NTA from $0.60 to $0.604, and EPS from 16.16 cts to 16.53 cts. Completion of the sale is expected to be at beginning of Sep ’13. Boustead will finance the purchase through internal resources, external investors and bank borrowings. Boustead notes there is significant redevt potential given the current underutilized plot ratio of 0.38, vs an allowable plot ratio of 1.0x, representing an additional 198.3k sf of untapped plot ratio. Ausgroup expects to recognize a profit of A$14.5m, with a portion to be booked immediately and the rest amortized over the period of the lease. Ausgroup intends to deploy the net sale proceeds toward reduction of bank borrowings, facilitate other corporate funding requirements and for general working capital.