Ascendas REIT (A-REIT) announced recently that it has entered into a sale and purchase agreement to divest its 10 Woodlands Link property to Sengkang Import & Export Pte Ltd for S$19.28m (net proceeds of ~S$18.9m).

The property is a light industrial building comprising a three-storey warehouse and is ~19.2 years old with a remaining land lease tenure of approximately 38.7 years. Completion is expected in 3QCY17.

This divestment price comes in at an attractive premium of 60.7% and 16.8% above its purchase price of S$12.0m and latest valuation of S$16.5m (as at 31 Mar 2017), respectively. Furthermore, the property has been vacant since Dec last year after the expiry of its single tenant.

It is also in-line with A-REIT’s strategy to recycle its capital, although this property is relatively small in scale, forming just 0.2% of the valuation of A-REIT’s investment properties.

For now we have a BUY rating and S$2.66 fair value estimate on A-REIT.

Source: OCBC Research - 2 Jun 2017