CapitaLand Ascendas REIT to divest KA Place in Singapore at a premium to valuation
20 April 2023, Singapore – CapitaLand Ascendas REIT Management Limited, as the manager (the “Manager”) of CapitaLand Ascendas REIT (“CLAR”), is pleased to announce that HSBC Institutional Trust Services (Singapore) Limited, in its capacity as trustee of CLAR (the “Trustee”), has entered into a sale and purchase agreement today for the sale of KA Place, 159 Kampong Ampat in Singapore (the “Property”) to KA Place SPV 1 Pte. Ltd. for a sale consideration of S$35.38 million (the “Sale Consideration”).
The Sale Consideration represents a 219% premium to the original March 2005 purchase price of S$11.1 million and a 55% premium to the market valuation of the Property of S$22.8 million[1] as at 31 December 2022. The divestment of the Property (the “Proposed Divestment”) is not expected to have any material impact on CLAR’s net asset value and distribution per Unit for the financial year ending 31 December 2023.
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 (“Unitholders”). After careful evaluation, the Manager has decided that it is an opportune time to divest the Property and redeploy the capital towards value-adding opportunities.
Assuming the Proposed Divestment was completed on 1 January 2022, the proforma impact on CLAR’s net property income and distribution per Unit for the financial year ended 31 December 2022 would have been a decrease of S$0.92 million and 0.005 Singapore cents, respectively.
Net proceeds after divestment costs are expected to be S$30.65 million. The 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 31 December 2022, CLAR’s aggregate leverage will be reduced from 36.3% to approximately 36.2%.
The Proposed Divestment is expected to complete within the second quarter of 2023. Upon completion, 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/Europe.
In accordance with the trust deed dated 9 October 2002 constituting CLAR (as amended, varied and/or supplemented from time to time), the Manager is entitled to a divestment fee of 0.5% of the Sale Consideration of the Property, which would be paid in cash.
About the Property
KA Place, 159 Kampong Ampat is a 7-storey high-specification industrial building with a car park on the second storey. The Property has a total gross floor area of 10,163 sqm. The Property has a remaining land lease tenure of about 35 years.
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[1] In accordance with the requirements of Appendix 6 of the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore, the Manager and the Trustee have commissioned Savills Valuation And Professional Services (S) Pte Ltd to carry out a valuation of the Property as at 31 December 2022 using the discounted cashflow analysis and income capitalisation approaches.