Ascendas Reit divests 25 Changi South Street 1 in Singapore
Singapore, 24 February 2020 – Ascendas Funds Management (S) Limited (the Manager), the manager of Ascendas Real Estate Investment Trust (Ascendas Reit) is pleased to announce that HSBC Institutional Trust Services (Singapore) Limited (in its capacity as trustee of Ascendas Reit) (the Trustee) has entered into a sale and purchase agreement on 24 February 2020 with Hao Mart Pte Ltd (the Purchaser) for the sale of No. 25 Changi South Street 1 in Singapore (the Property) for S$20.3 million (Proposed Divestment).
This divestment is in line with the Manager’s proactive asset management strategy to improve the quality of Ascendas Reit’s portfolio and optimise returns for Unitholders. The Manager has evaluated various options and decided that it is an opportune time to divest the Property and redeploy the capital.
The proposed sale price of S$20.3 million is 14.0% higher than the original purchase price of S$17.8 million and 2.0% higher than the market valuation of the Property of S$19.9 million1 as at 31 December 2019. The Proposed Divestment is not expected to have any material effect on Ascendas Reit’s net asset value and distribution per Unit for the financial year ending 31 December 2020.
Assuming the Proposed Divestment was completed on 1 January 2019, the proforma impact on Ascendas Reit’s net property income and distribution per Unit for the financial year ended 31 December 2019 would have been an increase of S$0.2 million and 0.006 Singapore cents respectively.
Net proceeds after divestment costs are expected to be S$19.6 million. The 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 Ascendas Reit’s borrowings as at 31 December 2019, its aggregate leverage will be reduced from 35.1% to approximately 35.0%.
The Proposed Divestment is expected to complete within the first quarter of 2020, following which Ascendas Reit will own 96 properties in Singapore, 35 properties in Australia, 38 properties in the United Kingdom and 28 properties in the United States.
In accordance with Ascendas Reit’s Trust Deed, the Manager is entitled to a divestment fee of 0.5% of the sale price of the Property, which would be paid in cash.
About the Property
25 Changi South Street 1 is a two-storey ramp-up warehouse building located along Changi South Street 1. It has a gross floor area of 13,998 sq m. The property is approximately 19 years old and has a remaining land lease tenure of about 37 years.
Notes:
1 The valuation was commissioned by the Manager and the Trustee, and was carried out by Edmund Tie & Company (SEA) Pte Ltd using the capitalisation approach and discounted cash flow approach.