CATALIST-LISTED Alset International said on Saturday (Dec 10) that it has entered into an agreement to sell American Home Reit for a consideration of around US$26.3 million to its controlling shareholder.

American Home Reit is wholly owned by Alset International’s 99.99 per cent subsidiary, Alset EHome. It is in the business of rental of real estate in the US, and currently has a portfolio of 112 single family rental units.

The purchaser, Alset Inc, is a controlling shareholder of Alset International. Together with its subsidiaries, it holds around 85.4 per cent of the total issued and paid-up share capital of the company.  

Alset Inc is also an associate of both Alset International’s chief executive and executive chairman Chan Heng Fai, and Chan Tung Moe, who is an executive director and co-chief executive of the company.

“The proposed disposal is part of the company’s capital recycling plan to unlock and recognise the value of the real estate that could be redeployed to grow the company,” Alset International said in the bourse filing.

It added that the proceeds will provide the financial capability to undertake property development projects and/or the expansion of the company’s existing business without the need for external financing in the future. 

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The indicative real estate value held by the target as at Sep 30, 2022, was US$27.5 million, based on the preliminary valuation conducted by the independent property valuer, CBRE. Real estate accounted for at least 95 per cent of the total assets of American Home Reit.

The consideration of US$26.3 million will be satisfied by an offset of US$13.9 million due to the purchaser by the company; US$1 million in cash; and US$11.4 million through the issuance of a promissory note.

As the proposed disposal is an interested party transaction, it is subject to approval by shareholders of the company at an extraordinary general meeting to be convened.

An independent financial adviser (IFA), W Capital Markets, has been appointed to advise the audit committee – which is considered independent – in connection with the proposed disposal. The audit committee will obtain an opinion from the IFA before forming its view on the proposed disposal. 

Alset International shares closed unchanged at S$0.036 last Friday.