ESR-REIT Announces S\$338.1 Million Divestment of Eight Non-Core Singapore Assets
ESR-REIT Announces S\$338.1 Million Divestment of Eight Non-Core Singapore Assets
Major Portfolio Rejuvenation and Capital Recycling Initiative to Enhance Quality and Financial Flexibility
Singapore, 15 December 2025 – ESR-REIT Management (S) Limited, the manager of ESR-REIT, has announced a significant strategic move involving the proposed divestment of eight non-core industrial properties in Singapore for a total consideration of S\$338.1 million. This transaction is a key part of the REIT’s ongoing portfolio rejuvenation and capital recycling strategy, and is set to strengthen the REIT’s balance sheet and position it for future growth.
Key Highlights of the Divestment
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Aggregate Sale Consideration: S\$338.1 million, representing a 2.0% premium over the independent valuation as at 30 November 2025.
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Portfolio Quality Enhancement:
- Overall weighted average land lease tenure increases from 43.3 to 44.8 years.
- Singapore portfolio’s weighted average land lease improves from 31.0 to 31.8 years.
- Weighted average lease expiry (WALE) rises from 4.1 years to 4.3 years.
- Proportion of assets with less than 15 years of land lease falls from 13.2% to 11.8%.
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Financial Impact:
- Pro forma aggregate leverage improves from 42.8% to approximately 39.2%.
- Debt headroom expands from S\$790.2 million to about S\$1,114.0 million.
- Pro forma interest coverage ratio (ICR) for trailing 12 months improves from 2.5x to 2.6x.
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Distribution Impact: Pro forma DPU for FY2024 is projected to decrease by 4.1% from 21.190 Singapore cents to 20.323 Singapore cents, while NAV per Unit remains unchanged at S\$2.75 (figures adjusted for the 10:1 Unit consolidation on 5 May 2025).
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Properties in the Divestment: 46A Tanjong Penjuru, 86 & 88 International Road, 120 Pioneer Road, 21 & 23 Ubi Road 1, 24 Jurong Port Road, 13 Jalan Terusan, 60 Tuas South Street 1, and 43 Tuas View Circuit.
Details of the Divested Assets
| Property Name |
Asset Type |
Gross Floor Area (sqm) |
Net Lettable Area (sqm) |
Remaining Land Lease (years) |
Valuation (S\$ million) |
Sale Consideration (S\$ million) |
| 46A Tanjong Penjuru |
Logistics |
48,652 |
48,136 |
24.6 |
109.5 |
113.5 |
| 86 & 88 International Road |
General Industrial |
22,039 |
22,039 |
29.2 |
42.2 |
42.2 |
| 120 Pioneer Road |
General Industrial |
23,043 |
20,064 |
29.4 |
34.1 |
34.1 |
| 21 & 23 Ubi Road 1 |
High-Specs Industrial |
18,838 |
13,778 |
31.3 |
42.5 |
45.0 |
| 24 Jurong Port Road |
Logistics |
75,904 |
67,647 |
11.4 |
68.0 |
68.0 |
| 13 Jalan Terusan |
General Industrial |
22,777 |
21,366 |
9.5 |
16.7 |
16.7 |
| 60 Tuas South Street 1 |
General Industrial |
4,150 |
4,150 |
9.5 |
3.5 |
3.5 |
| 43 Tuas View Circuit |
General Industrial |
11,412 |
11,412 |
12.3 |
15.1 |
15.1 |
| Total |
– |
226,815 |
208,592 |
22.4 |
331.6 |
338.1 |
Strategic Rationale and Shareholder Implications
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Portfolio Rejuvenation: The divestment targets properties with shorter remaining land lease tenures—four of them have less than 13 years left—allowing ESR-REIT to reduce exposure to leasehold decay risk and improve the overall quality and longevity of its asset base.
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Capital Recycling: Proceeds from the sale are expected to be used primarily to repay existing debt, thus reducing leverage and increasing financial flexibility for future value-accretive investments, including asset enhancement initiatives (AEIs), redevelopments, and acquisitions focused on “New Economy” assets.
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Potential Impact on Share Value:
- The reduction in leverage and improvement in portfolio metrics may be viewed positively by investors, as it enhances the REIT’s resilience and capacity for future growth.
- However, the immediate drop in DPU (-4.1%) could be seen as a short-term negative, though the unchanged NAV per Unit indicates that value is preserved at the asset level.
- The sale at a 2% premium to valuation may drive market confidence in management’s ability to extract value from non-core assets.
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Price Sensitivity: This transaction is material in size and strategic impact, affecting both the REIT’s income distribution in the near term and its medium-to-long-term growth profile. Investors should closely monitor management’s subsequent capital deployment and acquisition plans, as these will be key to future DPU recovery and growth.
About ESR-REIT
ESR-REIT is a leading S-REIT listed on the Singapore Exchange, with a diversified portfolio of 70 properties across Singapore, Australia, and Japan, and total assets of approximately S\$5.9 billion as of 30 June 2025. The REIT focuses on logistics, high-spec industrial, business park, and general industrial assets, and is a constituent of the FTSE EPRA Nareit Global Real Estate Index.
The REIT is managed by ESR-REIT Management (S) Limited and sponsored by ESR, a major Asia-Pacific real estate and infrastructure platform.
Contact Information
- Lyn Ong, Senior Manager, Capital Markets and Investor Relations, [email protected]
- Sua Xiu Kai, Manager, Corporate Communications, [email protected]
- General Line: +65 6222 3339
Disclaimer: This article is provided for informational purposes only and does not constitute investment advice or an offer to buy or sell any securities. The value of REIT units and the income derived from them may fall as well as rise. Past performance is not indicative of future results. Please consult your financial advisor before making any investment decisions. The information herein is based on publicly available data as of 15 December 2025 and may be subject to change without notice.
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