ESR-REIT plans to sell 8 properties for $338.1 million to entities managed by Brookfield Asset Management at a slight premium of 2% above valuation.
Assuming all net proceeds are used to repay existing debt, ESR-REIT's pro forma aggregate leverage as at Dec 31 2024, will decrease from 42.8% to 39.2%.
On a pro forma basis as at Sept 30, the portfolio's weighted average remaining land lease will improve from 43.3 years to 44.8 years.
Specifically for its Singapore portfolio, the weighted average remaining land lease will improve from 31.0 years to 31.8 years; and weighted average lease expiry will increase from 4.1 years to 4.3 years.
The properties to be sold are: 46A Tanjong Penjuru, 86 & 88 International Road, 120 Pioneer Road, 21 & 23 Ubi Road 1, 24 Jurong Port Road, 13 Jalan Terusan, 60 Tuas South Street 1, and 43 Tuas View Circuit.
Adrian Chui, CEO of the REIT's manager, calls this divestment a "disciplined and strategic step" in its ongoing portfolio rejuvenation and capital recycling efforts.
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"By realising value from non-core assets, we continue to reduce the impact of land lease decay in our net asset value.
Chui adds that the move will make the REIT better positioned to pursue new, value-accretive New Economy opportunities though asset enhancement initiatives, redevelopments and acquisitions.
"The improvements in portfolio fundamentals, leverage and debt headroom underscore our commitment to delivering sustainable total returns to our unitholders," he adds.
ESR REIT closed at $2.74 on Dec 12, up 0.74% for the day.
