CapitaLand Ascendas REIT to divest 21 Jalan Buroh in Singapore at a premium to valuation
11 Oct 2024
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CapitaLand Ascendas REIT is divesting 21 Jalan Buroh, a three-storey ramp-up warehouse with a seven-storey ancillary office block, for S$112.8 million. The divestment at a premium to valuation is in line with CLAR’s proactive asset management strategy to optimise returns for unitholders.
Singapore, 11 October 2024 – 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 21 Jalan Buroh in Singapore (the “Property”) to GDS IDC Services Pte. Ltd. (the “Purchaser”) for a sale consideration of S$112.8 million (the “Sale Consideration”).
The Sale Consideration represents a premium to the original purchase price of S$58.4 million at which CLAR acquired the Property for in June 2006, and a premium to the average of two independent market valuations of the Property which is S$67.5 million[1] as at 1 July 2024. 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 (“DPU”) for the financial year ending 31 December 2024.
21 Jalan Buroh, Singapore
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.
The estimated net proceeds after divestment costs are expected 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 unitholders.
Assuming the Proposed Divestment had been completed on 1 January 2023, the pro forma impact on CLAR’s net property income and DPU for the financial year ended 31 December 2023 would be a decrease of S$4.6 million and 0.085 Singapore cents, respectively.
For the purpose of calculating the pro forma impact on CLAR’s aggregate leverage, if the net proceeds were used to repay CLAR’s borrowings as at 31 December 2023, its aggregate leverage would have reduced from 37.9% to approximately 37.4%.
The Proposed Divestment constitutes an “interested person transaction” under the listing manual of the Singapore Exchange Securities Trading Limited (“Listing Manual”) and an “interested party transaction” under Appendix 6 of the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore ("Property Funds Appendix"). The aggregate value of all transactions entered into by CLAR and the Purchaser’s group of companies during the current financial year, including the Proposed Divestment is less than 3% of CLAR’s latest audited net asset value / net tangible assets. In this regard, the Proposed Divestment is not required to be immediately announced under the Listing Manual and the Property Funds Appendix. The Audit & Risk Committee of the Manager is of the view that the Proposed Divestment is on normal commercial terms and is not prejudicial to the interests of CLAR and its minority unitholders.
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 will be paid in the form of new units in CLAR.
The Proposed Divestment is expected to complete within the fourth quarter of 2024. Following the completion, CLAR will own 228 properties comprising 96 properties in Singapore, 34 properties in Australia, 48 properties in the United States, and 50 properties in the United Kingdom/Europe.
About the Property
21 Jalan Buroh is a three-storey ramp-up warehouse with a seven-storey ancillary office block. The Property has a total gross floor area of 39,978 square metres and a remaining land lease tenure of about 31 years.
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1. The independent valuers, Cushman & Wakefield VHS Pte Ltd and Knight Frank Pte Ltd, were commissioned by the Manager and the Trustee, respectively. The valuation by Cushman & Wakefield VHS Pte Ltd (S$67.5 million as at 1 July 2024) was carried out using the income capitalisation approach, discounted cash flow analysis and comparison approach. The valuation by Knight Frank Pte Ltd (S$67.5 million as at 1 July 2024) was carried out using the income capitalisation approach and discounted cash flow analysis.
