First Reit to divest Imperial Aryaduta Hotel & Country Club for 332.2 billion rupiah

Property is a non-core legacy asset within the healthcare-focused Reit’s portfolio that was already identified for disposal

First Real Estate Investment Trust (Reit) has agreed to divest its property, Imperial Aryaduta Hotel & Country Club, for 332.2 billion rupiah (S$26 million), its manager said on Friday (Oct 17).

The buyers are indirect wholly owned subsidiaries of Indonesian property player Lippo Karawaci.

The manager said the divestment consideration translates to a 0.65 per cent premium to the average of two independent valuations that came to 330 billion rupiah.

It also represents a premium of 22.2 per cent over its initial investment cost, said Victor Tan, executive director and chief executive officer of the manager.

Tan noted that the property is a non-core legacy asset within the healthcare-focused Reit’s portfolio of 32 assets, and that the manager had previously identified it for disposal.

The property was acquired by First Reit in 2006 for S$21.2 million as part of its portfolio of assets for its initial public offering.

BT in your inbox

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Its existing master lease agreement is set to expire on Dec 31, 2025, and would have exposed the Reit to the risk of the loss of rental income thereafter, noted the manager.

It will also require increasing capital expenditure to maintain and upkeep the property for sustained appeal, as it is a 31-year-old hospitality asset.

“The proposed divestment, therefore, comes at an opportune time for capital recycling,” the manager said.

Net proceeds from the proposed divestment would amount to S$25.5 million, and may be used to repay debt, redeem perpetual securities and/or fund general corporate and working requirements, it added.

Units of First Reit closed 1.8 per cent or S$0.005 higher at S$0.28 on Friday, before the announcement.