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ESR-REIT to pick up S$95M Singapore industrial property

ESR-REIT signed an option agreement to acquire for S$95.0 million an industrial asset in Singapore from Hyflux Membrane Manufacturing (S) Pte. Ltd.

The real estate investment trust will purchase the approximately 72,569-square-meter 8 Tuas South Lane property, which consists of five factories, an eight-floor warehouse and four blocks of dormitories, according to a release.

Total purchase costs are predicted to amount to about S$111.0 million, including the S$95.0 million consideration, an S$11.4 million upfront land premium, stamp duties of S$3.2 million and aggregate transaction costs of roughly S$1.4 million.

The asset was independently valued at S$115.0 million, including an upfront land premium, by Edmund Tie & Co. (SEA) Pte. Ltd., as at Oct. 10.

Meanwhile, the property carries a land tenure of about 20 remaining years, with a 15-year term renewal option tagged on. The seller and Hydrochem (S) Pte. Ltd. will lease back the lion's share of the property's space for a period of 15 years once the transaction closes.

ESR-REIT plans to fund the buy with debt financing, with its manager ESR Funds Management (S) Ltd. also able to pay for the purchase through cash from asset sales, equity, debt and/or hybrid securities.

Adrian Chui, CEO of ESR Funds Management, said the purchase was the first transaction for the REIT — formerly known as Cambridge Industrial Trust — since e-Shang Redwood became a majority shareholder in ESR Funds Management. e-Shang Redwood indirectly owns an 80% stake in the REIT's manager and is also the second-largest unit holder in the REIT.

As of Oct. 17, US$1 was equivalent to S$1.36.