ESR-Logos REIT Offloads Seven Singapore, Australia Industrial Assets for $250M 

ESR-Logos REIT is selling six industrial assets in Singapore and another logistics facility in Australia for a combined S$337 million ($250 million), allowing the SGX-listed trust to reduce its debt and lower gearing.

The REIT’s manager said on Friday that it has signed a set of put and call option agreements with special purpose vehicles represented by the Singapore arm of Intertrust Group, an Amsterdam-based trust management company, for a portfolio of five industrial facilities spread across the western and eastern parts of the city-state at a total consideration of S$313.5 million.

That deal followed two smaller divestments announced earlier in the week, with the disposals, coupled with a S$300 million equity fundraising it completed in April, potentially allowing ESR-Logos REIT to reduce its gearing ratio to as low as 33.6 percent from 41.8 percent last year.

“This significant debt headroom would facilitate E-LOG to recapitalise for growth in a very timely environment as asset valuations begin to correct and improve our portfolio quality with in-demand New Economy assets,” said Adrian Chui, chief executive officer and executive director of the manager.

Selling in Bulk

ESR-Logos REIT is selling the five non-core assets to Intertrust at a 5.1 percent discount from the portfolio’s book value of S$330.4 million, with the selling price equivalent to about S$1,804 per square metre of the portfolio’s gross floor area of 173,783 square metres (1.87 million square feet).

The largest asset in the batch is a 66,566 square metre campus at 3 Pioneer Sector 3 in western Singapore’s Tuas district, which is being sold for S$95 million.

Also included in the five-asset portfolio is a 5-storey warehouse at 6 Chin Bee Avenue in Taman Jurong, which the trust is selling for S$93 million, while in Jurong East near the Bukit Timah Nature Reserve Park the ESR Logos-REIT is letting go of a pair of three-storey warehouses at 4 and 6 Clementi Loop and an eight-level warehouse at 30 Toh Guan Road valued at S$57.8 million.

The final property in the set is the Pan Asia Logistic Centre at 21 Changi North Way in Tenah Merah district which is valued at S$30.1 million.

Mingtiandi was not able to confirm the identity of the beneficiary purchaser of the five assets and Intertrust had not responded to inquiries from Mingtiandi by the time of publication, while ESR-Logos REIT representatives declined to discuss the buyer’s plans for the assets. CBRE is understood to have advised on the transaction.

Among the publicly-known clients of Intertrust, a part of global business administration service provider CSC, are Morgan Stanley, Blackstone Credit, Rakiza and Tory Burch.

In separate agreements inked earlier last week, the trust manager agreed to divest 22 Chin Bee Drive in Jurong West to SGX-listed engineering firm Sanli Environmental for S$13.8 million, and is shifting a logistics asset at 51 Musgrave Road in Queensland, Australia to an undisclosed buyer for A$10.8 million ($7.23 million).

Freeing Up Space

“We seek to continue to improve the overall portfolio quality and position E-LOG to further capitalise on the favourable trends which are reshaping the production, delivery and consumption of goods as the pre-eminent New Economy REIT in APAC,” said Chui.

With all net proceeds being used to pay down debt, the deal is estimated to allow ESR-Logos REIT to boost its pro forma debt headroom to S$996.4 million or more than triple the S$305 million it had available at the end of 2022.

Once this month’s batch of disposals are completed later this year, the trust will have a portfolio of 74 properties across its home city, Australia and Japan, down from 80 assets. The weighted average term to lease expiry for the trust’s portfolio is also expected to rise to 3.3 years from 3.2 years in March, while the pro forma concentration risk of single-tenanted buildings as a portion of rental income will also be trimmed from 23.3 percent at the end of the first quarter to 21.7 percent.