CLAR, the manager of the REIT, has announced the divestment of Singapore industrial building KA Place for a consideration of $35.38 million. The sale and purchase agreement was entered into between the REIT’s trustee, HSBC Institutional Trust Services (Singapore) and KA Place SPV 1.The proposed divestment is in-line with the manager’s proactive asset management strategy and 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. The net proceeds after divestment costs are expected to be $30.65 million. This divestment is expected to be completed within 2Q2023.The consideration sum represents a 219% premium to CLAR’s purchase price of $11.1 million in March 2005 and a 55% premium to the property’s market valuation of $22.8 million as at Dec 31, 2022. KA Place at 159 Kampong Ampat is a seven-storey high-specification industrial building with a carpark on the second storey, and a total gross floor area of 10,163 sq m, with a remaining land lease tenure of about 35 years.If the net proceeds were used to repay CLAR’s borrowings as at Dec 31, 2022, CLAR’s aggregate leverage will be reduced from 36.3% to approximately 36.2%. The proposed divestment is also in line with the manager’s strategy to improve the quality of CLAR’s portfolio, and optimize returns for unitholders. Assuming the divestment had happened on Jan 1, 2022, the pro-forma impact on CLAR’s net property income (NPI) and distribution per unit (DPU) for the financial year ended Dec 31, 2022 would have been a decrease of $0.92 million and 0.005 Singapore cents, respectively.In accordance with the trust deed, the manager is entitled to a divestment fee of 0.5% of the sale consideration of the property, which will be paid in cash.Units in CapitaLand Ascendas REIT closed 3 cents higher, or 1.05% up, at $2.88 on April 20.
Divestment of KA Place in Singapore
CapitaLand Ascendas REIT (CLAR) has announced the divestment of KA Place, a seven-storey high-specification industrial building in Singapore, for a consideration of $35.38 million. The sale and purchase agreement was entered into between HSBC Institutional Trust Services (Singapore) – the REIT’s trustee – and KA Place SPV 1.
The consideration sum – which represents a 219% premium to CLAR’s purchase price of $11.1 million in March 2005 and a 55% premium to the property’s market valuation of $22.8 million as at Dec 31, 2022 – reflects CLAR’s proactive asset management strategy to improve the quality of its portfolio and optimize returns for unitholders.
The Singapore industrial building located at 159 Kampong Ampat has a total gross floor area of 10,163 sq m, a carpark on the second storey, and a remaining land lease tenure of about 35 years.
If the net proceeds of this divestment – which are estimated to be $30.65 million after deducting divestment costs – are used to repay CLAR’s borrowings as at Dec 31, 2022, its aggregate leverage is projected to reduce from 36.3% to approximately 36.2%.
Assuming the proposed divestment was completed on Jan 1, 2022, the pro-forma impact on CLAR’s net property income (NPI) and distribution per unit (DPU) for the financial year ended Dec 31, 2022 would have been a decrease of $0.92 million and 0.005 Singapore cents, respectively.
In accordance with the trust deed, the manager is entitled to a divestment fee of 0.5% of the sale consideration of the property, which will be paid in cash.
Units in CapitaLand Ascendas REIT closed 3 cents higher, or 1.05% up, at $2.88 on April 20. The proposed divestment is expected to complete within 2Q2023. Upon completion, CLAR will own 229 properties, comprising 96 in Singapore, 36 in Australia, 48 in the United States and 49 in the United Kingdom and Europe.
The manager has carefully evaluated the property and determined that it is an opportune time to divest the property and redeploy the capital towards value-adding opportunities. 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.