The manager of ESR-REIT says it has entered into put and call options to divest its properties on 11 Serangoon North Avenue 5 and 3C Toh Guan Road for a total consideration of $53 million.
The property in Serangoon is a six-storey multi-tenanted general industrial building with a remaining land lease tenure of 36.3 years.
The Toh Guan Road property is a five-storey multi-tenanted warehouse with a remaining land lease tenure of 30.1 years.
The sale consideration represents a 5.0% premium to the properties’ total fair value of $50.5 million as at Dec 31, 2020, and a 7.1% premium to the properties' acquisition price.
The net proceeds will go towards repaying outstanding borrowings, funding upcoming asset enhancements, potential acquisitions, as well as other requirements.
If the net proceeds from the divestment are fully utilised to repay outstanding borrowings, the pro forma gearing of ESR-REIT would be reduced to 40.9% from 42.0% as at March 31 following the completion of the divestment.
“This divestment is in line with our ongoing portfolio optimisation strategy to monetise non-core assets which can be channelled towards value creation opportunities,” says Adrian Chui, CEO and executive director of the manager.
“The divestment will allow us to improve the quality of ESR-REIT’s portfolio and optimise returns for unitholders. We will continue to actively review our portfolio to deliver greater income stability and opportunities for growth,” Chui adds.
ESR-REIT’s portfolio will consist of 55 properties across Singapore with a total gross floor area of 14.8 million sq ft after the divestment.
The divestment is expected to be completed in 2HFY2021.
Units in ESR-REIT closed 0.5 cent higher or 1.2% up at 41.5 cents on April 28.
