SINGAPORE (Dec 22): The manager of Ascendas REIT (A-REIT) is divesting 84 Genting Lane to corporate gifts firm Axxel Marketing for $16.68 million, which represents a 66.8% premium to the property’s original purchase price of $10 million.
The market valuation of the property at end-March this year was $15.8 million based on the valuation conducted by Knight Frank.
84 Genting Lane is located in an industrial estate bounded by MacPherson Road, Jalan Kolam Ayer and Aljunied Road.
The building has a gross floor area of 11,917 sqm and occupancy of 90.1% as at end Sept. At roughly 19 years' old, the property still has remaining land lease tenure of about 22 years.
In a filing after trading closed in Friday, A-REIT’s manager says the divestment is in line with its proactive asset management strategy to redeploy capital and optimise returns for unitholders.
Following completion of the divestment, the REIT expects to book $15.3 million in net proceeds after the deduction of divestment costs.
The manager of the REIT says the proceeds may be recycled to fund committed investments, used to repay existing indebtedness, extend loans to subsidiaries, and/or fund general corporate and working capital needs.
For illustration purposes, it is estimated that aggregate leverage would be reduced to 33% from 33.1% previously should the net proceeds be used to repay the REIT’s debts as at end Sept.
Assuming the proposed divestment was completed on April 1 2016, the pro forma impact on the REIT’s net property income and distribution per unit for the financial year ended March 31 2017 would have been a reduction of $1.2 million and 0.02 cent respectively.
The divestment is slated to complete within 1Q18, following which the REIT will own 100 properties in Singapore and 31 properties in Australia.
The transaction is not expected to have any material effect on the REIT’s net asset value (NAV) and distribution per unit (DPU) for the financial year ended March 2018.
This story, written by Michelle Zhu for The Edge Singapore, first appeared on Dec 22.