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ESR-REIT settles S$335M property deals, boosts portfolio value by 31.4%

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ESR-REIT settles S$335M property deals, boosts portfolio value by 31.4%

ESR-REIT's portfolio is expected to get a 31.4% boost following the completion of the REIT's separate acquisitions of a commercial property and an industrial asset in Singapore for S$240.0 million and S$95.0 million, respectively.

The REIT bought the high-specifications building at 7000 Ang Mo Kio Ave. 5 from Ho Lee Group Pte. Ltd. after the managers of Viva Industrial Trust passed on the chance to buy the property in October for S$300.0 million, pursuant to a right-of-first-refusal agreement with the seller.

ESR is purchasing an 80% stake in 7000 AMK Pte. Ltd., the asset's owner. The 91.9%-leased building, which comprises a six-story production block and a five-story office block, has a gross floor area of about 1,073,233 square feet and net lettable area of 834,783 square feet.

Funding for the purchase was sourced from a combination of internal cash resources, existing bank debt facilities and proceeds from the REIT's issuance of subordinated perpetual securities.

Meanwhile, ESR-REIT also wrapped up its S$95.0 million acquisition of the roughly 72,569-square-meter 8 Tuas South Lane property from Hyflux Membrane Manufacturing (S) Pte. Ltd. The total cost of the acquisition was earlier predicted at about S$111.0 million., which includes the land consideration, upfront land premium, stamp duties and aggregate transaction costs.

Together, the two transactions will increase the REIT's portfolio value to S$1.75 billion from the S$1.33 billion recorded Sept. 30. Following the recent purchases, the weighted average leases expiry of the portfolio was also extended to 4.2 years from 3.4 years.

In addition, ESR Funds Management (S) Ltd., the manager of ESR-REIT, is planning an issuance of up to 263.0 million new units of the REIT in a bid to rebalance its capital structure. The manager said in a news release that the issuance would allow ESR-REIT to begin 2018 from a position of strength.

As of Dec. 13, US$1 was equivalent to S$1.35.