ESR-Reit to divest 28 Senoko Drive industrial building for S$12m

ESR-REIT's trustee RBC Investor Services Trust Singapore has entered into an agreement with Tat Seng Packaging Group T12 : T12 0% to divest an industrial building at 28 Senoko Drive for S$12 million.

The price tag represents an 8.4 per cent discount to the property's fair value of S$13.1 million, said the manager of ESR-Reit J91U : J91U 0% in a press statement on Monday (Jan 10). The industrial building was acquired in 2007 at S$12 million.

The net proceeds will be used to repay outstanding borrowings and/or fund upcoming asset enhancements, potential acquisitions, unit buy-back and general working capital requirements.

Adrian Chui, chief executive of the Reit's manager, said in a press statement: "In line with our portfolio optimisation strategy, this divestment represents an opportunity for us to divest one of our dated and non-core assets where there are limited redevelopment and/or asset enhancement opportunities due to the short remaining land lease.

He added: "The divestment allows ESR-Reit to free up capital for growth and higher value opportunities, thus improving the quality of ESR-Reit portfolio while optimising unitholders' returns."

Tat Seng Packaging said in a separate bourse filing on Monday that of the view the proposed acquisition is in line with the group’s business plan to own the industrial building that it is currently renting.

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The four-storey general industrial building has a gross floor area of 159,338 square feet and a remaining land lease tenure of approximately 18 years as at end-2021.

Post-divestment, ESR-Reit's portfolio will consist of 55 properties located across Singapore with a total gross floor area of approximately 15.2 million square feet.

The divestment is subject to approval by JTC Corporation and is expected to be completed in the first quarter this year.

Units of ESR-Reit ended Monday at S$0.475, down S$0.01 or 2.1 per cent while shares of Tat Seng Packaging last traded at S$0.755 on Jan 4. 

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