Ascendas REIT (A-REIT) announced that it has entered into a Sale and Purchase agreement with Goodman Developments Asia and GCLP Developments No. 3 (BI) Ltd, whereby it will divest its Jiashan Logistics Centre (JLC) at an attributable property value of S$26.0m (~RMB125m). JLC is a logistics facility located near Shanghai, and its development was completed by A-REIT in Mar this year.

The attributable property value of S$26.0m comes in 24% higher than the total development costs of ~S$20.9m and is also 3% above the property’s book value of S$25.2m, as at 31 Mar 2016. The property had zero occupancy, as at 31 Mar 2016. Net proceeds after tax and divestment cost are expected to be S$23.5m, and this deal is estimated to be completed in 1QFY17.

This proposed divestment comes shortly after A-REIT proposed to sell its Ascendas Z-link business park property in Beijing in late May this year, a reflection of its continued capital recycling strategy. We maintain our BUY rating and S$2.56 fair value on A-REIT.

Source: OCBC Research - 9 Jun 2016