ESR-REIT Announces S\$338.1 Million Divestment of Eight Singapore Industrial Properties
Singapore, 15 December 2025 – ESR-REIT Management (S) Limited (“the Manager”), manager of ESR-REIT, has announced a significant portfolio divestment involving eight industrial properties in Singapore. The transaction, executed through put and call option agreements (PCOAs) with entities managed by affiliates of Brookfield Asset Management, is valued at an aggregate S\$338.1 million. This strategic move is part of ESR-REIT’s ongoing capital recycling and portfolio rejuvenation strategy.
Key Points of the Divestment
- Properties Divested: 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.
- Aggregate Sale Consideration: S\$338.1 million, reflecting a 2% premium to the independent valuation of S\$331.6 million and S\$11.0 million above the book value of S\$327.1 million as of 30 June 2025.
- Completion Timeline: Sales (except for 46A Tanjong Penjuru) are expected to complete by Q2 2026, with 46A Tanjong Penjuru completing by Q3 2026.
- Portfolio Metrics: The divested properties are all on leasehold land with a weighted average remaining lease of 22.4 years. Combined, they offer a total gross floor area of 226,815 sqm and a net lettable area of 208,592 sqm.
- Buyer: Unrelated third-party purchasers managed by affiliates of Brookfield Asset Management.
Principal Terms of the Transaction
- Put and Call Options: Each purchaser has a call option, and the vendor has a put option, subject to conditions precedent including JTC Corporation’s approval.
- Deposit: A 5% deposit is payable by each purchaser within five business days of signing, held by the vendor’s solicitors as stakeholders.
- “As-is, Where-is” Sale: Properties will be sold in their current state.
- Concurrent Completion: Completion of each sale is conditional on the concurrent completion of the others (except 46A Tanjong Penjuru).
Strategic Rationale and Benefits for Shareholders
- Capital Recycling & Portfolio Rejuvenation: The divestment is a part of ESR-REIT’s strategy to shed non-core assets, manage land lease decay, and redeploy capital into higher-growth, “New Economy” opportunities.
- Reduction in Leverage: Pro forma aggregate leverage will drop from 42.8% to 39.2% post-divestment, increasing debt headroom from S\$790.2 million to S\$1,114.0 million.
- Improved Interest Coverage: Interest coverage ratio (ICR) for the trailing 12 months as at 31 Dec 2024 would improve from 2.5x to 2.6x, strengthening financial resilience.
- Minimising NAV Erosion: The proportion of assets with land leases under 15 years will drop from 13.2% to 11.8%. Four properties in the divestment have less than 13 years of lease remaining, reducing future NAV erosion.
- Enhanced Portfolio Quality: Weighted average remaining land lease of the overall portfolio improves from 43.3 years to 44.8 years, and the Singapore portfolio from 31.0 years to 31.8 years. Weighted average lease expiry rises from 4.1 years to 4.3 years.
Financial Impact and Shareholder-Relevant Details
- Net Proceeds: After costs and GST, net proceeds are approximately S\$329.3 million, with an estimated net gain of S\$2.2 million over book value.
- Use of Proceeds: Proceeds will be used for working capital, capital expenditure, debt or perpetual securities repayment, unit buybacks, and/or future redevelopments, AEIs, and acquisitions.
- Impact on Distribution Per Unit (DPU): Pro forma DPU for FY2024 would decrease from 21.190 cents to 20.323 cents, a 4.1% reduction, reflecting the loss of income from the divested properties.
- Impact on NAV per Unit: NAV per unit remains flat at S\$2.75 post-divestment, with minor reduction in total NAV due to the transaction.
- Listing Manual Compliance: The transaction does not require unitholders’ approval as the relative figures under Chapter 10 of the SGX Listing Manual are all below 50%. This means the divestment is within ESR-REIT’s ordinary course of business, but it must comply with Rule 1010 disclosure requirements.
- No Change in Board or Major Unitholder Interests: No new director appointments or changes to controlling unitholder interests are involved.
Details of the Divested Properties
| 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-Specifications 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 GFA: 226,815 sqm; Total NLA: 208,592 sqm; Weighted average remaining land lease: 22.4 years.
Potential Share Price Implications
- This is a major capital recycling event for ESR-REIT and positions the REIT for future growth and financial flexibility.
- The reduction in leverage and improved balance sheet could be viewed positively by the market, enhancing the REIT’s ability to pursue new acquisitions or asset enhancements.
- However, the decrease in DPU may impact near-term distributions, which investors should weigh against the longer-term benefits of a rejuvenated, higher-quality portfolio.
- The premium achieved over book value and independent valuation signals the Manager’s ability to extract value from non-core assets.
- The transaction’s scale, counterparty profile (Brookfield affiliates), and strategic rationale make this a potentially price-sensitive development for ESR-REIT’s units.
About ESR-REIT and ESR
ESR-REIT is a leading Asia Pacific S-REIT with a diversified portfolio of 70 properties across Singapore, Australia, and Japan, totaling approximately S\$5.9 billion in assets as at 30 June 2025. The REIT is managed by ESR-REIT Management (S) Limited and sponsored by ESR, a prominent APAC real asset owner and manager focused on logistics, data centres, and energy infrastructure.
Investor Considerations
- The divestment is within ESR-REIT’s ordinary course of business and does not require unitholder approval as per SGX rules.
- Copies of the PCOAs and independent valuation reports are available for inspection at the Manager’s office for three months from this announcement.
Disclaimer: This article is for informational purposes only and does not constitute investment or financial advice. The value of units in ESR-REIT and the income derived from them may fall as well as rise. Past performance is not indicative of future results. Investors should consider their individual circumstances, consult their professional advisors, and read the official announcements and financial statements before making any investment decisions. The author and publisher are not responsible for any losses incurred as a result of reliance on the information provided herein.
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