Arshiya entered into a binding term sheet with Ascendas Property Fund Trustee (APFT), whereby APFT, in its capacity as Trustee-Manager of Ascendas India Trust, has agreed, subject to satisfactory duediligence, agreement on definitive documentation and obtaining necessary Board approvals, to acquire 6 warehouses (totaling 8,32,000 sq.ft.) of Arshiya at its Free Trade & Warehousing Zone (FTWZ) located at Panvel, near Mumbai.

The intended objective of Arshiya is to achieve an asset light model going forward, while Ascendas will potentially be getting a portfolio of income yielding Free Trade warehouses. The term sheet also envisages the financing of the future development on the available surplus land which has development potential of approx. 4 million sq.ft. within the existing notified area.

The indicative gross consideration envisaged is Rs 5.34 billion, to be paid in two tranches; Rs 4.34 billion upon signing of a definitive agreement and the balance Rs 1 billion to be paid over 4 years on achieving certain milestones. The majority of the monetization 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 lease back 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. 

Shares of the company gained Rs 2.65, or 3.42%, to trade at Rs 80.10. The total volume of shares traded was 69,687 at the BSE (10.19 a.m., Thursday).