ESR-REIT enters joint venture with PTC to acquire Pandan Road property

Singapore 50 dollar bill

ESR-REIT has entered a joint venture with Poh Tiong Choon Logistics (PTC) to acquire leasehold interest in a property at 48 Pandan Road for S$225 million, the REIT said in a filing to SGX Monday.

The joint venture, PTC Logistics Hub LLP, plans to fund the acquisition with a S$40.2 million contribution from PTC, a S$38.6 million contribution from the REIT and around S$146.2 million in debt, the filing said.

ESR-REIT said it will fund its portion with a combination of debt, units in the REIT and/or proceeds from an equity fund-raising.

ESR-REIT will hold 49 percent of the joint venture, with PTC holding the remainder, the filing said.

Once the deal is completed, the joint venture will lease the property to PTC for a ten year term, with a fixed rental escalation, ESR-REIT said.

The deal will strengthen the REIT’s exposure to the logistics sector, improve the weighted average lease expiry of the portfolio and provide a stable income stream, the filing said.

In addition, the joint venture is a strategic partnership with PTC, a leading third-party logistics provider, with operations in transportation, bulk cargo handling, warehousing, terminal management and property development, the REIT said.

“The strategic partnership has also been undertaken with PTC to provide real estate solutions for their business expansion and logistics real estate needs in Singapore and the region,” the filing said.

The deal will be accretive, based on pro forma estimates of ESR-REIT’s DPU if the issuance of new units had been completed on 1 January, the REIT said.

The property, located in the Jurong Industrial Estate, has a newly redeveloped six-storey ramp-up warehouse with rooftop parking, and it has recently obtained its certificate of statutory completion, the REIT said.

It also has a dormitory, a temporary ancillary canteen and and ancillary office, which serves as PTC’s corporate headquarters, the REIT said.

The property’s lease term is for 24 years and four months, starting from 1 July, the REIT said.

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