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CapitaLand Ascendas REIT divests local industrial building at 219% premium from 2005 purchase price

Jovi Ho
·2-min read

KA Place at 159 Kampong Ampat is a seven-storey industrial building with a total gross floor area of 10,163 sq m.

The manager of CapitaLand Ascendas REIT (CLAR) A17U has announced the divestment of Singapore industrial building KA Place for a consideration of $35.38 million.

According to an April 20 filing, the REIT’s trustee, HSBC Institutional Trust Services (Singapore), has entered into a sale and purchase agreement to sell KA Place to KA Place SPV 1.

The consideration sum represents a 219% premium to CLAR’s purchase price of $11.1 million in March 2005. The figure also represents a 55% premium to the property’s market valuation of $22.8 million as at Dec 31, 2022.

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

The proposed divestment is in line with the manager’s proactive asset management strategy to improve the quality of CLAR’s portfolio and optimise returns for unitholders of CLAR, says the manager. “After careful evaluation, the manager has decided that it is an opportune time to divest the property and redeploy the capital towards value-adding opportunities.”

Assuming the proposed divestment was completed on Jan 1, 2022, the pro-forma impact on CLAR’s net property income (NPI) and distribution per unit (DPU) for the financial year ended Dec 31, 2022 would have been a decrease of $0.92 million and 0.005 Singapore cents, respectively.

Net proceeds after divestment costs are expected to be $30.65 million. CLAR’s manager says the net proceeds may 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.

If the net proceeds were used to repay CLAR’s borrowings as at Dec 31, 2022, CLAR’s aggregate leverage will be reduced from 36.3% to approximately 36.2%.

The proposed divestment is expected to complete within 2Q2023.

Upon completion, CLAR will own 229 properties comprising 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, which would be paid in cash.

Units in CapitaLand Ascendas REIT closed 3 cents higher, or 1.05% up, at $2.88 on April 20.

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