A-REIT divests 6 Pioneer Walk for whopping 42.2% premium

Bought for S$22.5m, sold for S$32m.

Ascendas Funds Management (S) Limited, the manager of Ascendas Real Estate Investment Trust (A-REIT) announced that HSBC Institutional Trust Services (Singapore) Limited (in its capacity as trustee of A-REIT) has entered into a Conditional Sale & Purchase Agreement (Conditional S&P) with GKE Private Limited (GKE) for the sale of 6 Pioneer Walk for S$32.0 million.

The sale price of S$32.0 million represent a 42.2% premium over the original purchase price of S$22.5 million in 2007. The property, which has a book value of S$24.6 million as at 31 March 2013, has remaining land tenure of about 23 years and the divestment is inline with the Manager’s proactive asset management strategy where it seeks to regularly review and rejuvenate its portfolio.

The Property is located at 6 Pioneer Walk within the Jurong Industrial Estate. It is a 2-storey warehouse with a ramp-up driveway and a 4-storey ancillary office as well as a single storey workshop and a container yard with a gross floor area of 20,094 sqm.

With the sale, A-REIT’s proforma gross revenue and net property income would reduce by S$1.9 million and S$1.6 million respectively for FY12/13 (assuming the sale was completed on 1 April 2012).

The sale proceeds from this divestment may be used to repay existing indebtedness, or for A-REIT’s general corporate and working capital purposes and/or to distribute to unitholders. The sale originated from an unsolicited enquiry from the buyer and the Manager has obtained in-principle approval from JTC for the sale. A-REIT divests 6 Pioneer Walk for S$32.0 million.

The transaction is expected to be completed by end June 2013, following which A-REIT will own 102 properties in Singapore and 1 business park property in China.