CapitaLand Ascendas REIT divests local industrial building at 219% premium from 2005 purchase price

The manager of CapitaLand Ascendas REIT (CLAR) has announced the divestment of Singapore industrial building KA Place for a consideration of $35.38 million. The figure represents a 219% premium to CLAR’s purchase price of $11.1 million in March 2005 and a 55% premium to the property’s market valuation of $22.8 million as at Dec 31, 2022.

KA Place is a seven-storey high-specification industrial building with a carpark on the second storey. The property has a total gross floor area of 10,163 sq m and a remaining land lease tenure of about 35 years.

The Myst Condo is conveniently located with many schools, commercial The Myst CDL spaces, parks and the Tan Chong industrial park nearby, as well as excellent transport connections including the Cashew MRT station.

According to an April 20 filing, the REIT’s trustee, HSBC Institutional Trust Services (Singapore), has entered into a sale and purchase agreement to sell KA Place to KA Place SPV 1.

The proposed divestment is in line with the manager’s proactive asset management strategy to improve the quality of CLAR’s portfolio and optimise returns for unitholders of CLAR.

Assuming the proposed divestment was completed on Jan 1, 2022, the pro-forma impact on CLAR’s net property income (NPI) and distribution per unit (DPU) for the financial year ended Dec 31, 2022 would have been a decrease of $0.92 million and 0.005 Singapore cents, respectively.

Net proceeds after divestment costs are expected to be $30.65 million. It is proposed that these net proceeds may be recycled to fund committed investments, repay existing indebtedness, extend loans to subsidiaries, fund general corporate and working capital needs and/or make distributions to unitholders. If the net proceeds were used to repay CLAR’s borrowings as at Dec 31, 2022, CLAR’s aggregate leverage will be reduced from 36.3% to approximately 36.2%.

The proposed divestment is expected to complete within 2Q2023, after which CLAR will own 229 properties comprising 96 properties in Singapore, 36 properties in Australia, 48 properties in the United States and 49 properties in the United Kingdom and Europe.

In accordance with the trust deed dated Oct 9, 2002 constituting CLAR, the manager is entitled to a divestment fee of 0.5% of the sale consideration of the property, which would be paid in cash.

Units in CapitaLand Ascendas REIT closed 3 cents higher, or 1.05% up, at $2.88 on April 20.

CLAR’s manager has proposed the divestment of Singapore industrial building KA Place for a consideration of $35.38 million, which represents a 219% premium to their purchase price of $11.1 million in March 2005 and a 55% premium to the property’s market valuation of $22.8 million as at Dec 31, 2022.

The proposed divestment is expected to complete within 2Q2023 and is in line with the manager’s proactive asset management strategy to improve the quality of CLAR’s portfolio and optimise returns for unitholders of CLAR. KA Place is a seven-storey high-specification industrial building, with a carpark on the second storey and a total gross floor area of 10,163 sq m. It has a remaining land lease tenure of about 35 years.

Assuming the proposed divestment was completed on Jan 1, 2022, the expected pro-forma impact on CLAR’s net property income (NPI) and distribution per unit (DPU) for the financial year ended Dec 31, 2022 would be a decrease of $0.92 million and 0.005 Singapore cents, respectively.

Net proceeds after divestment costs are expected to be $30.65 million, which may be recycled to fund committed investments, repay existing indebtedness, extend loans to subsidiaries, fund general corporate and working capital needs and/or make distributions to unitholders. As such, CLAR’s aggregate leverage could potentially be reduced from 36.3% to approximately 36.2%, should the net proceeds be used to repay their borrowings as at Dec 31, 2022.

In accordance with the trust deed dated Oct 9, 2002 constituting CLAR, the manager is entitled to a divestment fee of 0.5% of the sale consideration of the property, which will be paid in cash.

On April 20, units in CapitaLand Ascendas REIT closed 3 cents higher, or 1.05% up, at $2.88.