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Prime US REIT to divest asset at below valuation as it focuses on reducing leverage

The Edge Singapore
The Edge Singapore  • 2 min read
Prime US REIT to divest asset at below valuation as it focuses on reducing leverage
One Town Center at Florida. Net gearing on a pro forma basis will be reduced from 48.4% as of Dec 31, 2023 to 45.8%. Photo: Prime US REIT's website
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Prime US REIT plans to sell off one of its assets in Florida at below valuation, to pare down debt and to boost liquidity.

The asset, One Town Center, will be sold for US$82 million. It is valued at US$84.8 million as at Dec 31, 2023, or 6% of the REIT's portfolio value. Prime US REIT acquired the property in 2021 for US$99.5 million.

If the entire net proceeds is used to repay existing debt, the REIT's aggregate leverage is expected to reduce from 48.4% as of Dec 31, 2023 to 45.8% on a pro forma basis.

The divestment is expected in July 2024.

One Town Center, the asset, is a 10-storey Class A office tower and a five-storey attached parking garage, with a net lettable area of 191,294 square feet. 

"The divestment is a strategic sale, in line with Prime US REIT OXMU -

’s deleveraging strategy," says Prime US REIT.

See also: Sabana Industrial REIT prices $100 mil 4.15% sustainability-linked bonds due 2029

"The manager is seeking to bring down the aggregate leverage and maximise liquidity to fund capital expenditures which are necessary in driving new leasing activities."

The REIT acknowledges the sale will be at slightly below valuation but will nonetheless benefit its unitholders, with immediate additional liquidity.

The sale will also give the REIT's manager more financial flexibility to manage its portfolio.

See also: Mapletree Logistics Trust completes divestment of 30 Tuas South Avenue 8

Prime US REIT changed hands at 11 cents ahead of the trading break, up 0.91% thus far today, but down 49.55% year to date.

 

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