SINGAPORE - Mapletree Logistics Trust (MLT) has agreed to sell its 23-year-old cargo lift warehouse at 3 Changi South Lane to Nova Furnishing Holdings for $22 million as part of a rejuvenation strategy.

The proposed sale price represents a 39.2 per cent premium to the property’s latest valuation of $15.8 million as at Oct 1.

In a bourse filing on Tuesday, the real estate investment trust’s (Reit) manager said the divestment was considered since the warehouse’s specifications are “outdated”, and it is no longer suitable nor efficient to meet the requirements of today’s logistics users.

The warehouse sits on a relatively small land area – an 8,023 sq m site – with limited potential for redevelopment into a modern, ramp-up logistics facility, it added. The property has a gross floor area of 11,315 sq m.

JTC Corporation has granted in-principle approval for the transaction.

Letting go of the property will improve the Reit’s financial flexibility to pursue investment opportunities with higher yield or higher growth potential to deliver long-term sustainable value to its unitholders, said MLT’s manager.

It added that it plans to distribute any divestment gain from the transaction to unitholders, after taking into account all relevant costs and expenses, while the capital released may be used to fund committed investments or reduce debt.

The manager’s divestment fee, supposed to be 0.5 per cent of the sale consideration, shall be used to offset the external agent’s marketing commission, which is 1 per cent of the sale consideration, it said.

The proposed divestment is expected to be completed by the fourth quarter of the Reit’s 2022/23 financial year. Following this, MLT’s portfolio will comprise 185 properties.

Units of MLT closed 1.3 per cent higher at $1.58 on Tuesday.