ESR-REIT Announces Strategic S\$101 Million Divestment of Hotel Strata Lot at 2 Changi Business Park Avenue 1

Key Highlights

• Divestment of Non-Core Asset: ESR-REIT is divesting its hotel strata lot (including some retail units) at 2 Changi Business Park Avenue 1, Singapore for approximately S\$101.0 million to Coliwoo Project Ace Pte Ltd. The sale price aligns with an independent valuation of S\$100.9 million.
• Structure of Sale: The divestment is executed via a put and call option agreement, with an option fee already paid, and the balance of the sale consideration due upon completion.
• Portfolio Impact: After the divestment, ESR-REIT will retain the business park, retail, and convention centre components of ESR BizPark @ Changi, representing approximately 81% of the total gross floor area of the integrated development.
• Lease Arrangements: The sale is structured as a lease in favour of the purchaser, with the term tied to the underlying JTC Corporation lease, and an option to renew if the JTC lease is extended.
• Financial Impact: The divestment is not expected to have a material impact on ESR-REIT’s net asset value or distribution per unit for FY2025. Notably, there has been no income contribution from the hotel component since September 2025, following expiry of its master lease.
• Use of Proceeds: Net proceeds will be used to repay borrowings, reduce interest expenses, and may be redeployed for accretive acquisitions, asset enhancement, redevelopment, or working capital.
• Completion Timeline: The transaction is expected to close in 1Q2026.
• Portfolio Remains Robust: Post-divestment, ESR-REIT will maintain a diversified portfolio of 70 properties across Singapore, Australia, and Japan, with interests in three Australian property funds.

Detailed Information for Investors

ESR-REIT Management (S) Limited has announced a strategic move to divest the hotel strata lot and certain retail units at 2 Changi Business Park Avenue 1 for S\$101.0 million. This is in line with the asset’s latest independent valuation and is a continuation of the REIT’s strategy to streamline its portfolio by divesting non-core assets.

The sale is being conducted via a put and call option agreement with Coliwoo Project Ace Pte Ltd, and includes a lease structure whereby the purchaser takes over the leasehold interest for a term coinciding with the underlying JTC lease (30 years from 1 February 2008), with an option to renew if JTC extends the lease and the purchaser pays the applicable premium.

Importantly for shareholders, there has been no income from the hotel component since September 2025 due to the expiry of its master lease. As such, the divestment will allow ESR-REIT to avoid further operating and capital expenses associated with the property. The divestment proceeds will be prioritised for repaying borrowings and reducing interest expenses, which could support DPU (distribution per unit) stability or potentially enhance financial flexibility for future investments.

Completion is targeted for Q1 2026, and the divestment is not expected to materially affect ESR-REIT’s net asset value or FY2025 DPU. This signals to investors that the transaction is primarily a portfolio optimisation move rather than a response to financial distress or operational underperformance.

Following completion, ESR-REIT’s portfolio will remain robust, comprising 70 properties across Singapore, Australia, and Japan, excluding 48 Pandan Road (held via JV), and with continued investments in three Australian property funds. The REIT’s portfolio is valued at S\$5.9 billion as of 30 June 2025, with 2.5 million sqm of gross floor area.

This divestment is consistent with ESR-REIT’s strategy to focus on “New Economy” and future-ready industrial assets, and to redeploy capital into higher-yielding or strategic investments as market opportunities arise.

Potential Price Sensitivity

• The sale price is in line with the most recent independent valuation, reflecting stable asset values.
• The removal of a non-income generating asset may be seen positively by investors, as it reduces future expense burdens and enhances capital flexibility.
• While the divestment is not expected to impact NAV or DPU in FY2025, redeployment of proceeds into accretive acquisitions or asset enhancements could positively affect DPU and share price over the medium term.
• The transaction is a clear signal of active portfolio management and strategic capital recycling, potentially supporting market confidence in management’s execution capabilities.

About ESR-REIT

ESR-REIT is a leading Asia-Pacific S-REIT focused on logistics, high-spec industrial, and business park properties. Its sponsor, ESR, is a major APAC real asset manager with a fully integrated platform and a mission to deliver sustainable space and investment solutions for the future.

Contact Information

• Lyn Ong, Senior Manager, Capital Markets and Investor Relations. Tel: +65 6222 3339. Email: [email protected]
• Sua Xiu Kai, Manager, Corporate Communications. Tel: +65 6222 3339. Email: [email protected]

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should consider their own financial situation and consult their financial advisors before making any investment decisions. Past performance is not indicative of future results. The value of ESR-REIT units and the income derived from them may fall as well as rise. No guarantee is given as to the performance or repayment of capital.

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