Investor Presentaiton
2
Significant Milestone of S$337.0m Non-Core Portfolio Divestment Reducing
Gearing While Awaiting Investment Opportunities Amidst Asset Repricing
■ Divestments are in-line with our 4R
strategy
■ Properties divested are Non-Core
assets
■ Evaluation criteria are in place to
analyse divestments
■ Double whammy: (1) Rate of value
decline increases for short land
leases (2) expected rise in cap and
discount rates impacting asset
valuations
■ Price discovery process by
•
CBRE (1)
■ Gearing reduced to 33.6% (2)
Coupled with unencumbered
portfolio will provide significant
debt headroom to:
✓
Optimise capital structure
Recycle capital towards
rejuvenating portfolio to higher
quality New Economy assets
Key Considerations of Proposed Portfolio Divestment
Non-Core Assets
Characteristics:
1) have short underlying
land lease,
2) are small in size,
3) have limited AEI/
redevelopment
potential or
4) have dated property
specs
1) Properties with short land leases will experience accelerated rate of decline in value
Portfolio of 5 SG assets have average remaining land lease of c.25 years
Had the Manager attempted to divest assets individually, the time taken to source for and negotiate with
individual buyers (restricted by JTC constraints) may be protracted; as such the aggregate selling price may
not be higher than the Portfolio Sale Consideration
2) Rising interest rates are putting pressure on asset valuation
Since start 2023, interest rates have risen by >100 bps, and is expected to increase capitalisation rates and
discount rates, negative impacting property valuations
It is difficult to predict when interest rates will stabilise or decrease, creating a potential double whammy on
property valuations while land lease decay continues amidst higher interest rates
Price Discovery Process Conducted by CBRE
01
CBRE was appointed in
Dec 2022 by the Manager
to manage the divestment
process for the 5
Singapore assets to obtain
the best possible price
02
JTC requirements for
industrial properties results
in smaller pool of potential
buyers as compared to
other sectors such as
office, retail, etc.
03
04
CBRE identified more than
35 potential buyers;
subsequently 8 investors
expressed interest in the
portfolio
Final evaluation
considered: (i) Sale Price,
(ii) Financing Certainty, (iii)
Track Record, (iv) Deal
Certainty considering JTC
ownership requirements
Since 2021, E-LOG has divested c.S$611.4 million of non-core assets at both discount and premium to valuation depending on property type,
building specifications and buyer profile achieving an average of 1.6% (3) premium to valuation and within regulatory thresholds
Notes:
ESR-LOGOS (1) For 5 out of the 7 properties divested. Please refer to announcement dated 14 July 2023 for more details. (2) On a FY2022 pro forma basis, including (i) the Equity Fund Raising and the divestment of 49 Pandan Road,
REIT
assuming the net proceeds from the Equity Fund Raising and the divestment of 49 Pandan Road, together with the net proceeds from the divestments announced on 23 June 2023, were fully used to repay existing debt
and (ii) the redemption of perpetual securities completed on 1 February 2023. (3) Weighted by valuation.
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