SDI Limited announced the purchase of a 6-acre site to support the long-term strategic plan for the Group and in the short-term adding important warehouse capacity. This strategic acquisition will ensure that the Company will increase its operational efficiencies and have excess capacity for future growth. The new site, a short 7 km distance from SDI's current site, comprises a 4,000 m2 warehouse on 2.8 acres, and a tenant occupying 3.2 acres of 6-acre site.

The tenant has a 1-year lease term remaining and a 5-year option. The purchase contract is on 60 days settlement terms. SDI will fund the $17.8 million purchase via secured bank debt. Following renovation work on the warehouse, SDI will relocate its warehouse facilities to the new location in January 2023.

In the first instance, SDI will use the location for warehousing purposes, with longer term plans to redevelop the remaining area to relocate the existing Bayswater manufacturing and office facilities. On completion of the relocation, the existing Bayswater site will be sold. Longer-term plans are yet to be finalised.

Additional warehousing space has become critical, and the Company has been searching for a warehouse to lease. When comparing the lease cost to this purchase cost, the differential is immaterial, after allowing for the rental income and the current cost of a third-party warehouse to facilitate additional storage. As indicated in the full year results presentation last week, SDI had purchased a 1.4 acre adjoining property to its current site for future development for a new warehouse.

At the time this was a strategic move as there was limited property available in the surrounding areas. This property and an adjoining property will now be sold.