ESR-REIT is divesting 45 Changi South Avenue 2, a general industrial building, for SGD11.1 million (USD8.25 million).
The sale consideration represents a 7.8% premium to the fair value of the property of SGD10.3 million, as appraised by Knight Frank.
“This divestment represents an opportunity for us to divest one of our non-core assets at a premium to book value”, said Adrian Chui, CEO of the REIT’s manager.
“Consistent with our ongoing portfolio optimisation strategy to focus on core properties, the divestment will enable us to recycle capital for opportunities with higher returns, thus improving the quality of ESR-REIT’s portfolio while optimising unitholders’ returns”, he added.
The divestment is not expected to have a material impact on ESR- REIT’s net asset value and net property income for the financial year ending 31 December 2021, said the REIT.
The net proceeds from the divestment will be deployed to repay outstanding borrowings, finance upcoming asset enhancements, or fund general working capital requirements.
Following the divestment, ESR-REIT will have a portfolio of 57 properties located across Singapore.
ESR-REIT was last done on the Singapore Exchange (SGX) at SGD0.475, which currently implies a distribution yield of 6.54% according to data compiled on the Singapore REITs table.