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Part of the property’s purchase will be funded through PTC’s $40.2 million contribution and the trustees’ $38.6 million contribution.
ESR-REIT has entered into a joint-venture via a limited liability partnership in Singapore known as PTC Logistics Hub LLP, with Poh Tiong Choon Logistics Limited (PTC) to acquire a property at 48 Pandan Road for $225 million.
ESR-REIT holds 49 percent of the partnership interest in the LLP, while PTC holds the other 51 percent.
Occupying a 437,436 sq ft site, the newly developed six-storey ramp-up warehouse has a gross floor area of 1.09 million sq ft. It features a rooftop parking, an ancillary dormitory, temporary ancillary canteen as well as an ancillary office that serves as PTC’s corporate headquarters.
In an SGX filing, ESR-REIT revealed that the property’s purchase consideration will be funded through PTC’s $40.2 million contribution, the trustees’ $38.6 million contribution, and a debt of around $146.2 million to be taken out by the LLP.
The total acquisition cost attributable to ESR-REIT is $44.4 million.
Once the proposed acquisition is completed, the property will be leased back by the LLP to PTC for 10 years with fixed rental escalation per annum.
ESR-REIT expects rental income from its logistics portfolio to increase to 22.3 percent from 19.7 percent, post-acquisition.
The REIT’s portfolio weighted average lease expiry is also expected to increase to 3.9 years from 3.7 years, while portfolio occupancy would improve to 92.6 percent from 92 percent.
In a separate filing, ESR-REIT revealed plans to conduct asset enhancement initiatives (AEIs) on two existing assets.
“This includes utilising untapped plot ratio to develop a modern high-specification industrial facility on the site of 7000 Ang Mo Kio Avenue 5 as part of its strategy to unlock value in its portfolio, and rejuvenation works at UE BizHub EAST to enhance its ‘work-live-play’ factor to attract quality tenants in the Changi Business Park region,” it said.
“Both development works are estimated to cost approximately S$45.7 million and are expected to provide an estimated yield on cost of up to 9.0 percent.”
Construction works for both properties are set to start in Q4 2019 and estimated to take 18 to 24 months to complete for the Ang Mo Kio site and 12 months for UE BizHub EAST.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
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