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Ascendas Reit divests Genting Lane property for close to S$17m, acquires third suburban office in Australia
ASCENDAS Real Estate Investment Trust (Reit) is intending to sell its No 84 Genting Lane property to Axxel Marketing Pte Ltd for S$16.68 million.
In a Singapore Exchange filing on Friday, Ascendas Funds Management (S) Limited, the manager of Ascendas Reit, said that HSBC Institutional Trust Services (Singapore) Limited, as the trustee of Ascendas Reit, has entered into a sale and purchase agreement with Axxel Marketing.
The proposed sale price of S$16.68 million is 66.8 per cent higher than the original purchase price of S$10 million. The market valuation of the property was S$15.8 million as at Mar 31, 2017, Ascendas Funds Management said.
Assuming the proposed divestment was completed on Apr 1, 2016, the pro forma impact on Ascendas Reit's net property income and distribution per unit for the financial year ended Mar 31, 2017 would have been a reduction of approximately S$1.2 million and 0.02 cent respectively.
Net proceeds after divestment costs are expected to be S$15.3 million.
"The proceeds may be recycled to fund committed investments, repay existing indebtedness, extend loans to subsidiaries, and/or fund general corporate and working capital needs," the company said.
If the net proceeds are used to repay Ascendas Reit's debts as at Sep 30, 2017, its aggregate leverage will be reduced from 33.1 per cent to approximately 33 per cent.
The transaction is expected to complete within the first quarter of 2018.
The proposed divestment is not expected to have any material effect on Ascendas Reit's net asset value and distribution per unit for the financial year ending Mar 31, 2018.
Ascendas Funds Management said that the proposed deal is in line with its "proactive asset management strategy to redeploy capital and optimise returns for unitholders".
Separately, Ascendas Funds Management also announced on Friday that Ascendas Reit has completed the acquisition of a suburban office property located in Queensland, Australia for A$106.2 million (S$109 million).
The annualised pro forma financial effect of all three acquisitions on FY16/17 distribution per unit would be an improvement of 0.026 Singapore cents. The latest acquisition will be funded through internal resources and/or existing debt facilities.
Ascendas Reit closed two Singapore cents lower, or 0.74 per cent, at S$2.68 on Friday.