First REIT has entered a deal to divest PT Tata Prima Inda (PT TPI), which owns all of Siloam Hospitals Surabaya (SHS) for IDR430 billion, or around S$40.9 million, the REIT said in a filing to SGX Wednesday.
The average of two independent valuations had valued the property at IDR429.58 billion, or around S$40.8 million, as of end-January, the filing said.
SHS, which was part of the REIT’s initial portfolio, was acquired for S$16.8 million, or around IDR176.8 billion, in 2006, the filing said, adding that translated to a 143 percent capital gain. SHS is located in the city of Surabaya in the province of East Java in Indonesia.
“The proposed divestment is in alignment with the ‘First REIT 2.0 Growth Strategy’ to reshape the portfolio of First REIT for capital efficient growth and is an opportunity to recycle a mature asset that has been held within First REIT’s portfolio since First REIT’s initial public offering,” the REIT said in the filing.
The buyers are PT Siloam International Hospitals Tbk (Siloam) and PT Megapratama Karya Bersama (MKB), which is 99.99 percent owned by Siloam and indirectly 0.01 percent held by PT Lippo Karawaci Tbk (LPKR), the filing said.
The net proceeds may be used to repay debt, finance capital expenditure and asset enhancement works and/or general corporate and working capital requirements, and to distribute as capital gains, First REIT said.
An extraordinary general meeting (EGM) will be called to seek shareholder approval of the deal, the REIT said, adding Stirling Coleman Capital was appointed independent financial advisor to advise the independent directors.