ESR-REIT has announced the divestment of its 45 Changi South Avenue 2 property for a sale consideration of $11.1 million, subject to approval by JTC Corporation. 

This figure excludes divestment costs and goods and services tax, and represents a 7.8% premium to the fair value of the property of $10.3 million.

45 Changi South Avenue 2 is a four-storey general industrial building in Changi South industrial estate, and has a gross floor area of 73,684 square feet. 

The divestment of the property 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, and will be completed in 1QFY2022.

In a release, the REIT said the net proceeds will be deployed to repay outstanding borrowings, finance upcoming asset enhancements and/or fund general working capital requirements.

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Following the divestment, ESR-REIT’s portfolio will consist of 57 properties located across Singapore with a total gross floor area of approximately 15.6 million square feet. 

Adrian Chui, CEO and executive director of ESR-REIT manager ESR Funds Management, says, “this divestment represents an opportunity for us to divest one of our non-core assets at a premium to book value… [and] will enable us to recycle capital for opportunities with higher returns, thus improving the quality of ESR-REIT’s portfolio while optimising unitholders’ returns.”

Shares of ESR-REIT closed at 48 cents on Aug 30, up one cent or 2.15% higher than its previous close.