The manager of ESR-LOGOS REIT J91U (E-LOG) has announced that it intends to divest seven of the REIT’s non-core assets for approximately $337.0 million.
The divestments are part of E-LOG’s capital recycling strategy where it intends to redeploy the capital back into leading new economy real estate assets.
Of these, five of them are non-core assets in Singapore divested at $313.5 million, representing a 5.1% discount to valuation. One of them is 22 Chin Bee Drive, divested for $13.8 million, representing a 6.2% premium over valuation. The last one is 51 Musgrave Road in Queensland, Australia for A$10.8 million ($9.8 million), representing a 2.4% premium over valuation.
Post-completion, E-LOG’s aggregate leverage on a pro forma basis will decrease from 41.8% to 33.6%.
The divestment will also see E-LOG’s pro forma weighted average lease expiry (WALE) increase to 3.3 years from 3.2 years. Its weighted average land lease expiry on a pro forma basis will increase to 37.9 years from 37.1 years before.
This also reduces the REIT’s pro forma concentration risk of single-tenanted buildings to 21.7% from 23.3% previously.
See also: Changes in ICR, leverage to come into effect immediately, with additional disclosures in March
After taking into account the divestment costs and applicable goods and services tax, the REIT will net about $322.4 million from the sale.
“We are delighted to announce the divestment of these non-core assets as part of our ongoing portfolio rejuvenation and capital recycling strategy to strategically recalibrate E-LOG to capitalise on emerging market opportunities specifically towards new economy assets,” says Adrian Chui, CEO and executive director of the manager.
“These divestments mark the achievement of another milestone to our announced 4R strategy: (i) portfolio rejuvenation; capital recycling; recapitalising balance sheet; and reinforcing sponsor support, as shared in our FY2022 results, through a calculated and focused action plan of divesting non-core assets and recycling them towards modern and in-demand new economy assets via asset enhancement initiatives, redevelopments and acquisitions,” he adds. “In short, we seek to continue to improve the overall portfolio quality and position E-LOG to further capitalise on the favourable trends which are reshaping the production, delivery and consumption of goods as the pre-eminent New Economy REIT in APAC.”
As at 2.22pm, units in E-LOG are trading 0.5 cents higher or 1.54% up at 33 cents.
