During a results briefing in January 2021, Adrian Chui, CEO of ESR-REIT’s manager, shared the REIT’s organic and inorganic road maps. On the asset enhancement initiative (AEI) front, ESR-REIT has earmarked $60 million to $70 million of enhancement works to be carried out over 12–18 months. These monies will be used for the development of a multi-tenanted high-specification building at 7000 Ang Mo Kio Avenue 5, suitable for advanced manufacturing, info-comm and data centre tenants. The average yield-on-cost is estimated at 7% on stabilisation.

Chui says at least four additional assets are likely to undergo extensive AEIs. Their valuations range from $40 million to $80 million. The assets are general industrial assets and are likely to be converted into high-tech assets, or assets with high specs.

ESR-REIT still has $59.1 million of capital gains available for distribution, which may be utilised to support the loss of income for the assets during construction. Also, Chui indicates that the REIT may divest up to $50 million of non-core assets, in line with its portfolio reconstitution strategy to improve portfolio quality, and use the sale proceeds to pare down debt and/or fund AEIs and developments.

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