Soilbuild Group to divest Penjuru Hub for S$60mln

The property developer anticipates a gain of approximately S$16.3 mln from the divestment.

Soilbuild Group Holdings Ltd on Wednesday said it has signed a put and call option agreement to divest Penjuru Logistics Hub, a purpose-built logistics warehouse located near Jurong Island and Jurong Port, for S$60 million, according to an announcement from the group.

Mr Low Soon Sim, Executive Director of Soilbuild said, “This divestment is part of our capital management strategy to enhance yields and returns for our growing business space portfolio held for lease. By realising the gains, we will be able to re-deploy our capital to assets which have longer leasehold and higher yields.”

The group said it is expecting a gain of approximately S$16.3 million from the divestment, net of estimated expenses in connection with the sale. Soilbuild had previously recognised a fair value gain of S$5.2 million upon revaluation of the warehouse property located at 34 Penjuru Lane following its completion.

Soilbuild will lease back the five-storey warehouse with 0.4 million square feet of business space for five years for about S$5 million a year. As at end-June 2010, Penjuru Logistics Hub had been leased to a range of logistics support businesses, including those for petrochemical and maritime companies located at Jurong Island and Jurong Port respectively. The property has a remaining lease of 22 years, the news release confirmed.

“With a stronger balance sheet and lower gearing, the Group is well placed to tap on new opportunities to optimise our portfolio mix and thereby enhance yields,” added Mr Low.