ESR-REIT Management (S) Limited has announced the proposed divestment of a portfolio comprising eight non-core industrial properties in Singapore. The aggregate sale consideration is S$338.1 million.

The transaction, announced on December 15, 2025, aligns with the manager’s ongoing Portfolio Rejuvenation and Capital Recycling strategy. The Divestment Consideration represents a 2.0% premium to the independent valuation of S$331.6 million as at 30 November 2025. This price also exceeds the assets’ book value of S$327.1 million by S$11.0 million. Net proceeds are estimated at S$329.3 million after transaction costs, generating an estimated net gain of S$2.2 million.

The Divestment Properties include 46A Tanjong Penjuru, 86 & 88 International Road, 120 Pioneer Road, 21 & 23 Ubi Road 1, 24 Jurong Port Road, 13 Jalan Terusan, 60 Tuas South Street 1, and 43 Tuas View Circuit.

The assets generated Net Property Income (NPI) of S$11.4 million for the six months ended June 30, 2025, which accounted for 6.9% of ESR-REIT’s NPI for that period.

Mr. Adrian Chui, Chief Executive Officer & Executive Director of the Manager, commented on the strategic move. “The Proposed Divestment represents a disciplined and strategic step in our ongoing Portfolio Rejuvenation and Capital Recycling efforts. By realising value from non-core assets, we continue to reduce the impact of land lease decay in our net asset value (“NAV”). Through enhancing our balance sheet strength, ESR-REIT is better positioned to pursue new, value-accretive New Economy opportunities though asset enhancement initiatives (“AEIs”), redevelopments and acquisitions. The improvements in portfolio fundamentals, leverage and debt headroom underscore our commitment to delivering sustainable total returns to our Unitholders.”

The divestment is expected to significantly improve the REIT’s financial and portfolio fundamentals. On a pro forma basis, assuming the net proceeds are used to repay debt, aggregate leverage is projected to drop from 42.8% to approximately 39.2%. This expands debt headroom from S$790.2 million to approximately S$1,114.0 million. Additionally, the pro forma Interest Coverage Ratio (ICR) is expected to improve from 2.5 times to 2.6 times.

The portfolio quality will also see an uplift. The weighted average remaining land lease across the portfolio will improve from 43.3 years to 44.8 years. The weighted average lease expiry (WALE) is set to increase from 4.1 years to 4.3 years. The Divestment Properties had an average remaining lease of 22.4 years, with four having leases of about 13 years or less. Consequently, short lease exposure of assets with remaining land leases of less than 15 years will be reduced from 13.2% to 11.8%.

However, the pro forma financial impact on Distribution Per Unit (DPU) is a 4.1% decline, dropping from 21.1903 Singapore cents to 20.323 Singapore cents for FY2024. The Net Asset Value (NAV) per unit is expected to remain unchanged at S$2.754.

Completion for seven properties is anticipated in the second quarter of 2026. The remaining asset is scheduled to complete separately in the third quarter of 2026, subject to relevant approvals.