ESR-REIT plans asset enhancement and expansion at two properties

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ESR-REIT plans S$45.7 million of asset enhancement initiatives (AEIs) for two existing properties, including plans to build a facility at the 7000 Ang Mo Kio Avenue 5 property, the REIT said in a filing to SGX Monday.

“The AEIs will provide unitholders with sustainable income and net asset value growth over the long term,” Adrian Chui, CEO of the REIT manager, said in the statement.

“This is part of ESR-REIT’s continuous process to optimise its portfolio through strategic asset enhancement initiatives to maximise unutilised plot ratio and asset rejuvenation,” he added.

The estimated yield on cost is up to 9.0 percent, the REIT said.

For the 7000 AMK property, the REIT said it plans to use untapped plot ratio to develop a new building on the site of the existing car park; the property currently has a six-storey production block and a five-storey office block, it said.

The new building will be an eight-storey high-specification industrial building with “generous” ceiling heights and floor loading capacity, and it will include an additional substation as an independent power source, the REIT said. Construction is expected to begin in the fourth quarter, with completion targeted for 18 to 24 months, it said.

ESR-REIT added that it is in advanced negotiations with various prospective tenants for the new building.

The asset enhancement plans will also include “rejuvenation” at UE BizHub EAST to enhance the “work-live-play” aspect to attract tenants in the Changi Business Park area, the filing said.

UE BizHub EAST is connected via underground walkway to the Expo station on the Downtown MRT line. It includes retail, hospitality, commercial and business park services, as well as a 251-room hotel.

As part of the revamp, the drop-off area will be redesigned to improve traffic flow into the property and access to the office lobbies will be changed to improve accessibility, the REIT said. The facade will be upgraded and the internal food street will be “given a facelift,” the filing said.

The asset enhancement is expected to begin in the fourth quarter and take around 12 months to complete, it said.

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