First REIT has divested a hospitality property for $25.9 million to buyers associated with the Riady family in a transaction classified as a related-party deal.

The Imperial Aryaduta Hotel & Country Club (IAHCC) has been identified as a non-core asset within First REIT's primarily hospital-focused portfolio.

The sale price of $25.9 million represents a premium of 22.2% over the REIT's original investment.

With net proceeds totaling $25.5 million, First REIT plans to utilize the funds to reduce debt and meet general operational requirements.

Victor Tan, CEO of the management team, stated that the divestment reflects the REIT's disciplined strategy toward capital recycling.

The sale of IAHCC is part of the manager's continuous efforts to unlock value while enhancing financial flexibility and optimizing the overall capital structure.

"Looking ahead, we remain fully dedicated to generating sustainable long-term value for our unitholders," Tan added.

First REIT indicated that its current master lease agreement for IAHCC is set to expire by the end of this year, which could have exposed the REIT to potential rental income losses thereafter.

The 31-year-old property will also necessitate increased capital expenditures for its maintenance and upkeep.

"Consequently, this proposed divestment is timely for capital recycling," stated the REIT.

First REIT units closed at 28 cents on October 17, marking a daily increase of 1.82% and a year-to-date rise of 7.69%.