CapitaLand Ascendas Reit to divest industrial asset in Singapore at S$45.3 million premium

CAPITALAND Ascendas Reit (Clar) is divesting an industrial property at 21 Jalan Buroh in Singapore for S$112.8 million.

This is nearly double the original purchase price of S$58.4 million, when the property was acquired in June 2006. It also represents a premium of S$45.3 million – or 67.1 per cent – to the average of two independent market valuations of the property, which was S$67.5 million as at Jul 1, 2024.

In a filing with the bourse on Friday (Oct 11), the manager of the real estate investment trust (Reit) said that the proposed divestment is in line with its proactive asset management strategy to “improve the quality of Clar’s portfolio and optimise returns for unitholders of Clar”.

Net proceeds after divestment costs are estimated to be S$102.9 million.

The proceeds may be utilised for various purposes, including financing committed investments, paying down debt, extending loans to subsidiaries, funding general corporate and working capital needs, and/or making distributions to shareholders, said the manager.

Should the net proceeds be used to repay Clar’s borrowings as at Dec 31, 2023, its aggregate leverage would be reduced from 37.9 per cent to about 37.4 per cent.

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The Reit’s pro forma net property income and distribution per unit (DPU) would also be a decrease of S$4.6 million and 0.085 Singapore cents, respectively.

The divestment of 21 Jalan Buroh is expected to be completed within the fourth quarter of this year. It is not expected to have any material impact on Clar’s net asset value and DPU for the financial year ending Dec 31, 2024.

With the property’s divestment, the Reit will own 228 developments: 96 in Singapore, 34 in Australia, 48 in the US, and 50 in the UK and Europe.

The 21 Jalan Buroh property comprises a three-storey ramp-up warehouse with a seven-storey ancillary office block, with a gross floor area of 39,978 square metres. It has a remaining land lease tenure of around 31 years.

Units of Clar closed at S$2.79 on Friday, down 0.4 per cent or S$0.01, before the announcement.