Capital recycling trend continues for S’pore-listed industrial Reits

SINGAPORE — Despite the lacklustre outlook on property capital values, industrial S-Reits (Singapore-listed real estate investment trusts) have still managed to divest some of their non-core assets at decent valuations, OCBC Investment Research said yesterday.

On Monday, Sabana Reit announced its proposal to divest its 218 Pandan Loop property for a sum of S$14.8 million, which is 9.6 per cent above its acquisition price of S$13.5 million and 13.8 per cent above its book value of S$13 million as at June 30, the research house noted.

Other Reits that have recently divested their assets include Cambridge Industrial Trust (CIT) and Ascendas Reit. CIT completed the divestment of its 2 Ubi View property on Oct 31 for a total consideration of S$10.5 million, translating into premiums of 6 per cent and 40 per cent to the book value and purchase price, respectively.

Ascendas Reit sold all three of its properties in China in June, July and November this year at prices above their last valuations, the research house added.

“We believe proceeds from the divestment of assets would likely be used to pare down debt, fund inorganic growth opportunities and finance asset enhancement initiatives and redevelopment of existing properties. This allows the Reits to refresh their portfolios and make themselves more relevant to market requirements,” said OCBC Investment Research, which has an overweight rating on the broader S-Reits sector.