ESR-Logos REIT Sells Western Singapore Shed for $26M as Focus Turns to Modern Assets

ESR-Logos REIT has completed the sale of an ageing industrial building in western Singapore for S$35 million ($26.5 million), as the SGX-listed trust shifts to investments in modern facilities with green credentials.

The divestment price of 81 Tuas Bay Drive excludes transaction costs and tax and represents a 16.7 percent premium to the independent valuation of S$30 million by JLL, according to the trust’s manager, which first announced the disposal in August. The buyer’s identity wasn’t disclosed, and a media representative for E-LOG had not responded to emailed queries about the deal by the time of publication.

The sale of the 2012-vintage shed near Singapore’s Tuas Port comes as the REIT prepares to take possession of a Japan logistics facility from its sponsor, Hong Kong-listed warehouse giant ESR. The acquisitions of that Nagoya asset and a majority stake in a Tuas industrial complex are due to close by the end of November, the manager said Wednesday in a business update.

“By integrating these high-quality assets, E-LOG’s portfolio will increasingly pivot towards future-ready green assets, reinforcing our commitment to sustainability and long-term value,” CEO and executive director Adrian Chui said in July.

Trading Up in Tuas

E-LOG acquired 81 Tuas Bay Drive in October 2018 for S$26.7 million. Developed by Ho Lee Group, the facility is tenanted to container maker Mauser Singapore and sits on land with a 60-year leasehold expiring in July 2066.

E-LOG’s sale price translates to S$3,502 ($2,650) per square metre of gross floor area based on the property’s 9,993 square metres (107,564 square feet) of GFA, with the REIT exiting at a 31.1 percent premium to cost.

The sale proceeds will go to repaying debt, financing potential acquisitions, asset enhancement initiatives and redevelopments, and funding general working capital needs, the manager said.

The disposal of 81 Tuas Bay Drive leaves E-LOG’s portfolio with 70 properties across Singapore, Japan and Australia, as well as investments in three Australian property funds. The REIT last sold Singapore assets just over a year ago, when a vehicle of JD Property and Hillhouse-backed EZA Hill acquired a set of properties for S$350 million ($255 million).

Three months ago the trust announced deals to acquire the ESR Yatomi Kisosaki Distribution Centre in Nagoya and a 51 percent interest in 20 Tuas South Avenue 14 — a modern, Green Mark Platinum-certified complex — for a total of S$772.6 million ($577.3 million).

The two transactions are to be funded by a mix of green debt financing and the proceeds from a preferential offering of new units backstopped by ESR and Canadian pension fund manager Ivanhoe Cambridge.

Q3 Income Dip

E-LOG posted a 6.5 percent year-on-year decline in third-quarter net property income to S$192.7 million ($145.7 million), according to the business update. Gross revenue fell 6.3 percent year-on-year to S$272.5 million for the three months to the end of September.

The manager said the results were affected by the divestment of 11 non-core assets during 2023 and the year to date, as NPI and gross revenue rose 1.2 and 1.9 percent on a “same-store basis”. The trust reported a portfolio occupancy rate of 91.3 percent, up from 90.3 percent a year earlier.

Also in the Tuas area, sponsor ESR agreed in October to sell a warehouse to Frasers Logistics and Commercial Trust for S$140.3 million ($107 million). FLCT is buying 2 Tuas South Link 1 as the SGX-listed trust’s first logistics asset in Singapore, adding 56,203 square metres of lettable warehouse space to the portfolio.