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. The trustee for the REIT, HSBC Institutional Trust Services (Singapore) has entered into a sale and purchase agreement to sell KA Place to KA Place SPV 1.

This consideration sum represents a 219% premium to what CLAR paid for the property in March 2005, a figure of $11.1 million. Moreover, the sale price is also 55% higher than the property’s market valuation of $22.8 million as at Dec 31, 2022.

Located at 159 Kampong Ampat, KA Place is a seven-storey high-specification industrial building with a carpark on the second storey. The gross floor area is 10,163 sq m and the land lease tenure is about 35 years.

The proposed divestment is in accordance with the manager’s strategy to improve the quality of the REIT’s portfolio and optimise returns for unitholders. If the divestment was completed on Jan 1, 2022, the net property income and distribution per unit of the REIT would decrease by $0.92 million and 0.005 Singapore cents, respectively.

The net proceeds from the sale are expected to be $30.65 million. CLAR’s manager plans to use this money to fund committed investments, repay existing indebtedness, extend loans to subsidiaries, fund general corporate and working capital needs and/or make distributions to unitholders. This would also lower the REIT’s aggregate leverage from 36.3% to approximately 36.2%.

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The proposed divestment is expected to complete within 2Q2023 and it would mean that CLAR will own 229 properties globally – 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, to 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 announced a divestment of the industrial building KA Place at 159 Kampong Ampat. The agreement was reached with KA Place SPV 1, with the consideration sum of $35.38 million representing a 219% premium to the 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.

The property is a seven-storey building with a gross floor area of 10,163 sq m and a remaining land lease tenure of about 35 years. The carpark is located on the second storey.

The proposed divestment is intended to improve the quality of the REIT’s portfolio and optimise returns for unitholders. If the divestment had been completed on Jan 1, 2022, there would have been a decrease of $0.92 million and 0.005 Singapore cents in CLAR’s net property income and distribution per unit, respectively.

Net proceeds from the sale are expected to amount to $30.65 million, which would 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. This should also reduce CLAR’s aggregate leverage from 36.3% to approximately 36.2%.

The proposed divestment is expected to complete within 2Q2023, and when it does, the REIT will own 229 properties globally – 96 in Singapore, 36 in Australia, 48 in the United States, and 49 in the United Kingdom and Europe.

If the proposal is accepted, the manager is entitled to a divestment fee of 0.5% of the sale consideration, to be paid in cash per the trust deed dated Oct 9, 2002. On April 20, units in CapitaLand Ascendas REIT closed 3 cents higher at $2.88.