Singapore's Largest Developer Will Sell 30 Office Parks for $1.2 Billion
Singapore's Largest Developer Will Sell 30 Office Parks for $1.2 Billion
(Bloomberg) -- CapitaLand Ltd. will divest 30 business parks in the U.S. and Singapore to Ascendas Real Estate Investment Trust for S$1.66 billion ($1.2 billion).
The city-state’s largest developer said in an exchange filing Friday that it expects to realize an estimated gain of around S$95.4 million on the transaction. Ascendas REIT will fund the acquisition using net proceeds from a proposed rights issue, loan facilities and the issuance of acquisition fee units.
Including this sale, CapitaLand will have announced more than S$5.2 billion of divestments so far this year -- exceeding its annual target of S$3 billion -- as it seeks to free up cash and reduce leverage. The property developer struck a S$6 billion deal in January with Singapore state investor Temasek Holdings Pte, also its biggest shareholder, to combine Temasek units Ascendas Pte and Singbridge Pte.
“The enlarged CapitaLand portfolio following our combination with Ascendas-Singbridge has provided us with a robust pipeline of quality assets and additional REIT vehicles for recycling assets,” CapitaLand Group Chief Executive Officer Lee Chee Koon said in a statement Friday. “The proposed divestments to Ascendas REIT will allow CapitaLand to unlock capital value for reinvestment and redeployment.”
Lee said CapitaLand will continue to manage the properties, and receive recurring fee income. The divestments mean CapitaLand should meet its target net debt-to-equity ratio of 0.64 by the end of 2020, he said.
Tech Contribution
The properties in the U.S. comprise a portfolio of 28 freehold office properties worth $935 million and located across six business parks in three cities -- San Diego, Raleigh and Portland. Tenants include Nike Inc. and Oracle Corp.
In Singapore, the properties are Nucleos and FM Global Centre, valued at S$289 million and S$91 million respectively.
Ascendas will offer 498 million units at S$2.63 each in the proposed rights issue, raising proceeds of around S$1.31 billion. Shares in CapitaLand rose 1.1%. Units in Ascendas REIT were halted from trade.
Ascendas Chief Executive Officer William Tay described the U.S. property acquisitions as strategic, considering the three cities’ buoyant tech sectors and the industry’s contribution to U.S. economic growth.
“In the U.S., technology is a big player and contributor to GDP,” Tay said at a media briefing in Singapore. “There’s a thesis behind which is looking at the asset classes that are enabling the drivers of the economy.”
Investing in the U.S. also creates synergies with the group’s properties in other markets, Tay said. For example, some of the U.S. tenants are also tenants of Ascendas’s Australian properties.
With the proposed acquisitions, Ascendas will own some 200 properties across four countries.
--With assistance from Melissa Cheok.
To contact the reporter on this story: Faris Mokhtar in Singapore at fmokhtar1@bloomberg.net
To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Peter Vercoe
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