THE manager of Ascendas Real Estate Investment Trust (Ascendas Reit) said in a Singapore Exchange (SGX) filing on Friday that the trustee of Ascendas Reit, HSBC Institutional Trust Services (Singapore), has entered into a sale and purchase agreement with Pension Real Estate Singapore Pte Ltd for the sale of No 13 International Business Park (IBP) for S$24.8 million.
Ascendas Reit completed the purchase of the property in 2006 for S$20 million, funded by bank debt, said an earlier press release by it.
No 13 IBP is a seven-storey business park building with a single-storey lab and basement car park. The building has a gross floor area of 10,116 square metres and is situated on a land area of 7,277 square metres. It has an occupancy rate of 39.6 per cent as at June 30, 2017.
After 11 years since the IBP’s purchase, it has a remaining land lease tenure of about 47 years.
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It said that the proposed sale price of S$24.8 million is 24 per cent higher than the original purchase price of S$20 million, and added that it is also higher than the market valuation of the property being at S$22.4 million as at March 31, 2017.
However, this valuation – which was commissioned by the manager and the trustee, and carried out by Edmund Tie & Company (SEA) Pte Ltd – used the capitalisation approach and discounted cash-flow analysis, according to a note in the SGX filing.
The proposed divestment is not expected to have any material effect on Ascendas Reit’s net asset value and distribution per unit for FY17/18.
Net proceeds after divestment costs are expected to be S$24.6 million. The SGX filing said that proceeds may be recycled to fund committed investments, used to repay existing indebtedness, extend loans to subsidiaries, or fund general corporate and working capital needs.
The transaction is expected to be completed by the third quarter of the year, following which Ascendas Reit will own 101 properties in Singapore and 29 properties in Australia. The proposed sale has been approved by JTC Corporation.
Ascendas Reit last traded at S$2.66, down two Singapore cents or 0.75 per cent, on Friday.
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