The sale consideration for the divestment of two self-storage properties has been lowered to US$45.5 million ($61.9 million) from US$49.0 million, says the manager of United Hampshire US REIT (UHREIT) on April 19.
The lower consideration was mutually agreed upon after the REIT manager and the purchaser, Storage Post, LLC, entered into a supplemental agreement on April 18.
The revised consideration was agreed on a willing-buyer and willing-seller basis, taking into consideration the independent valuation of the properties at US$44.4 million.
The new consideration is around 2.5% above the properties’ valuation as at Dec 31, 2021.
After deducting transaction related expenses of around US$1.4 million, the divestment will net UHREIT proceeds of US$44.1 million, which is 1.5% above the purchase price of US$43.4 million inclusive of top-up, or 14.0% above the book value of US$38.7 million without top-up.
The revised sale consideration will still net the REIT capital gains from the divestment and is still deemed as attractive in line of the recent spike in market volatility, says the REIT manager.
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On a pro forma basis, if the REIT had completed the divestment on Jan 1, 2021, its net property income (NPI) would have been lowered by 7.5% to US$38.8 million from US$41.9 million for the FY2021 ended Dec 31.
Distributable income would have been down by 10.2% to US$28.0 million from US$31.2 million.
Distribution per unit (DPU) during the period would have been lowered by 9.8% to 5.5 US cents from 6.1 US cents.
See also: Digital Core REIT faces tenant exit for Northern Virginia property
The REIT manager first announced that it would be divesting Elizabeth Self-Storage and Perth Amboy Self-Storage on Feb 23 for a total sale consideration of US$49.0 million.
Both freehold properties are located in New Jersey.
As at 9.20am, units in UHREIT are trading flat at 63.5 US cents
