First REIT has sold a hospitality property for $25.9 million to buyers controlled by the Riady family in what is deemed an interested party transaction.
The Imperial Aryaduta Hotel & Country Club (IAHCC) has been deemed non-core within First REIT's largely hospital portfolio.
The transaction price of $25.9 million is at a premium of 22.2% over the REIT's initial investment cost.
With net proceeds of $25.5 million, First REIT will redeploy the funds to lower debt and for general working needs.
Victor Tan, CEO of the manager, says the divestment underscores the REIT's disciplined approach to capital recycling.
The sale of IAHCC aligns with the manager’s ongoing efforts to unlock value, enhance balance sheet flexibility and optimise overall capital structure.
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"Moving ahead, we remain fully committed to delivering sustainable long-term value for our unitholders," adds Tan.
According to First REIT, its existing master lease agreement for IAHCC is set to expire by end of this year and would have exposed it to the risk of the loss of rental income thereafter.
The 31-year-old asset will also require increasing capital expenditure to maintain and upkeep.
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"The proposed divestment, therefore, comes at an opportune time for capital recycling," the REIT says.
First REIT units closed at 28 cents on Oct 17, up 1.82% for the day and up 7.69% year to date.
