ESR Reit acquires 80% interest in SPV holding Ang Mo Kio property for S$240m

SINGAPORE - ESR Reit (Real Estate Investment Trust) has acquired an 80 per cent interest in a special purpose vehicle that owns a leasehold interest in a property at 7000 Ang Mo Kio Avenue 5 in Singapore for S$240 million, marking its largest acquisition to date.

The acquisition was funded with internal cash resources, existing bank debt facilities and part of the proceeds from ESR-Reit's subordinated perpetual securities, said its manager ESR Funds Management (S) Ltd in an announcement on Thursday (Dec 14) morning.

Concurrently, the manager also proposed to undertake an equity fund-raising to issue up to 263.0 million new units in ESR-Reit to rebalance the Reit's capital structure.

ESR Cayman Limited, the sponsor, will undertake to the manager to take on its full entitlement of new units and any unsubscribed units up to a total subscription of S$125 million in the event the exercise includes a Preferential Offering.

The property is a high-specifications building located in an established industrial estate in the north-eastern part of Singapore and has an independent valuation of S$303 million (on a 100 per cent basis) as at end-October 2017.

The remaining 20 per cent interest in 7000 AMK Pte Ltd is held by the vendor, Ho Lee Properties. Put and call options have also been granted for ESR-Reit to purchase the remaining interest.

The property has a gross floor area of some 1.07 million sq ft, a net lettable area of about 834,783 sq ft and as at Dec 1, and has an occupancy rate of 91.9 per cent.

The acquisition by the Reit follows a recent acquisition of 8 Tuas South Lane from Hyflux Membrane Manufacturing for S$95 million, excluding upfront land premium and stamp duty, which was completed on Dec 13.

The two acquisitions will boost ESR-Reit's portfolio value by 31.4 per cent from S$1.33 billion to S$1.75 billion and is part of the Reit's on-going efforts to rejuvenate its portfolio by recycling capital released from divestments of lower yielding non-core assets.