CapitaLand Ascendas REIT divests local industrial building at 219% premium from 2005 purchase price
The manager of CapitaLand Ascendas REIT (CLAR) has announced the divestment of Singapore industrial building KA Place for a consideration of $35.38 million. According to an April 20 filing, the REIT’s trustee, HSBC Institutional Trust Services (Singapore), has entered into a sale and purchase agreement to sell KA Place to KA Place SPV 1.
The consideration sum is impressive, representing 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. The property has a total gross floor area of 10,163 sq m and a remaining land lease tenure of about 35 years.
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 manager has carefully evaluated the situation and 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 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.
Net proceeds after divestment costs are expected to be $30.65 million and 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 Dec 31, 2022, CLAR’s aggregate leverage will be reduced from 36.3% to approximately 36.2%.
The proposed divestment is expected to complete within 2Q2023, and when completed, 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 and Europe.
In accordance with the trust deed dated Oct 9, 2002 constituting CLAR, the manager is entitled to a divestment fee of 0.5% of the sale consideration of the property, which would be paid in cash.
Units in CapitaLand Ascendas REIT closed 3 cents higher, or 1.05% up, at $2.88 on April 20.
The manager of CapitaLand Ascendas REIT (CLAR) has recently revealed the planned divestment of KA Place, the industrial building in Singapore, at a price of $35.38 million. This figure is a remarkable 219% premium to the purchase price of $11.1 million back in March 2005, and 55% above the property’s market valuation of $22.8 million as of December 31, 2022.
The property is a seven-storey high-specification building with a carpark situated on the second storey. It has a total gross floor area of 10,163 sq m and a remaining land lease tenure estimated at around 35 years.
The sale of KA Place is part of the proactive asset management strategy of the manager in order to enhance the quality of the REIT’s portfolio and optimize returns for their unitholders. According to the manager, it is an appropriate time to divest the property for the realization of value-adding opportunities.
If the divestment had occurred on January 1, 2022, CLAR’s net property income (NPI) and distribution per unit (DPU) for the financial year ending December 31, 2022 would have dropped by $0.92 million and 0.005 Singapore cents respectively. It is envisaged that after the divestment cost, the net proceeds would be around $30.65 million.
These proceeds can be utilized to finance committed investments, pay off bulk of existing debts, give loans to subsidiaries, cater for general corporate and working capital requirements, or make distributions to unitholders. And, if used for the debt repayment, aggregate leverage of CLAR could drop from 36.3% to around 36.2%.
The proposed divestment is scheduled to complete from quarter 2 of 2023. Upon completion, CLAR will possess a total of 229 properties, 96 in Singapore, 36 in Australia, 48 in the US, and 49 in the UK and Europe.
In regards to the trust deed of October 9, 2002 constituting CLAR, the manager is entitled to a divestment fee of 0.5% of the sale consideration, which will be paid out in cash.
Units of CapitaLand Ascendas REIT ended the day on April 20 with 3 cents of rise, or 1.05% up, at $2.88.