Hyflux is selling its eponymous Hyflux Innovation Centre at Bendemeer Road to Ascendas Real Estate Investment Trust (A-Reit) for S$170 million in cash and will lease the property back for 15 years, the water treatment specialist said yesterday.
The deal, inked with HSBC Institutional Trust Services (Singapore) as trustee of A-Reit, will net a gain of about S$84 million over book value, rental support, and other expenses and charges, Hyflux said. It will free up funds for Hyflux to buy new technology and investments in research and development, allow it to expand and automate its membrane manufacturing operations in Tuas Hub and fund its infrastructure project tenders.
The property is about 83.9 per cent occupied and Hyflux will provide rental support for the remaining vacant space for three years, it said.
Hyflux executive chairman and chief executive Olivia Lum said: “The sale and lease-back transaction is part of our capital recycling strategy to enhance the efficiency of our balance sheet and to redeploy capital for strategic investments.
“Hyflux Innovation Centre will continue to be the nerve centre of our global operations and we intend to remain at Hyflux Innovation Centre for the long term.
A-Reit will also be paying an upfront premium of S$21.2 million for the remaining land lease to Jurong Town Corp. With 100 per cent occupancy, the acquisition is expected to generate a net property income yield of about 6.98 per cent in the first year, it said.
Following the acquisition, A-Reit’s weighted average lease term to expiry is expected to increase from 3.85 years to 3.96 years, it said. A-Reit will own a total of 103 properties in Singapore and two business park properties in China.
Source : Today – 27 Jun 2014