The manager of Frasers Logistics & Commercial Trust (FLCT) announced that it will be divesting three of its leasehold properties in South Australia for a total consideration of A$29.6 million ($29.4 million).
On Dec 10, the REIT entered into sale and purchase agreements to divest its ownership in three leasehold industrial properties.
The consideration represents a 19.4% premium to FLCT’s South Australia portfolio’s total book value of A$24.8 million as at Sept 30. It is also above the original purchase consideration of A$28.7 million at FLCT’s initial public offering in 2016.
The South Australia portfolio has a total lettable area of 26,413 sqm and is located within Burbridge Business Park in the north-western corner of Adelaide Airport.
As at Sept 30, the portfolio has an average age of 11.9 years, an average weighted average lease expiry (WALE) of 2.2 years and accounted for some 0.9% of FLCT’s net property income and 0.4% of its portfolio value.
“The proposed divestments of three non-core leasehold properties in South Australia… is part of our proactive asset management strategy and in line with our continuing focus on core industrial markets on the eastern seaboard of Australia. The divestment proceeds will also provide us with greater financial flexibility to manage FLCT’s capital,” says Robert Wallace CEO of the manager.
The estimated net proceeds of the divestment comes to about A$28.1 million after taking into account outstanding incentives, divestment fees, as well as other expenses.
The proceeds may be used for funding potential acquisition opportunities, reducing existing debt, or other general corporate purposes.
The proposed divestment is expected to be completed by March 31, 2021.
Units in FLCT closed 1 cent lower or 0.7% down at $1.35 on Dec 9.