Singapore-listed industrial REIT, Ascendas REIT, announced on 9 June that it has entered into a sale and purchase agreement with Goodman Developments Asia and GCLP Developments No. 3 (BVI) Limited to divest Jiashan Logistics Centre in Shanghai for SGD26.0 million.
The divestment will be executed through the acquisition of Ascendas REIT’s entire equity interest in its wholly-owned subsidiary, A-REIT JW Investment Pte Ltd, which indirectly owns the logistics facility.
“In continuation with our capital recycling strategy, we have accepted the purchasers’ offer to buy the recently-completed Jiashan Logistics Centre to realise a gain of about SGD5.1 million over the total development cost”, said Chia Nam Toon, CEO of the REIT’s manager.
“This will further strengthen our resources to look at other opportunities in Singapore, Australia and China”, he added.
According to the REIT, the transaction value of SGD26.0 million is 24% higher than the total development cost of about SGD20.9 million, and 3% higher than the book value of SGD25.2 million as at 31 March 2016.
However net proceeds from the sale, which is expected to complete in the REIT’s 1Q 2016/2017, are expected to be SGD23.5 million after tax and divestment costs. The manager will receive SGD130,000 from the transaction as divestment fee.
Proceeds from the divestment may be deployed towards funding committed investments, repay existing indebtedness, or for general corporate and working capital needs, said the REIT. Ascendas REIT’s aggregate leverage will reduce by approximately 0.2% should it choose to use the proceeds to repay its debts.
Units of Ascendas REIT last changed hands on the Singapore Exchange at SGD2.36.