One of 26 Australian properties being acquired by Ascendas REIT

Singapore-listed industrial REIT, Ascendas REIT (SGX:A17U), announced on 18 September that it is looking to purchase a portfolio of Australian logistics properties for AUD1,013 million (SGD1,013 million).

The portfolio, which has an aggregate occupancy of 94.4%, consists of nine properties in Sydney, nine in Melbourne, seven in Brisbane and one in Perth.

“The proposed acquisition, comprising 26 prime logistics properties located on freehold land in the key cities of Sydney, Melbourne and Brisbane, will establish Ascendas REIT as the eighth largest industrial landlord in Australia”, said Tan Ser Ping, Executive Director and CEO of the REIT’s manager. “The portfolio has 24 tenants with 30 triple net leases”, he added.

Ascendas REIT has established a wholly-owned managed investment trust by the name of ‘Ascendas REIT Australia’ to acquire and hold the portfolio of 26 properties. The REIT is expected to incur estimated transaction costs of about AUD64.8 million which includes stamp duty, professional advisory fees and other related costs.

The proposed acquisition is expected to generate a net property income yield of approximately 6.0% post-transaction costs in the first year, said the REIT. The portfolio has a committed weighted average lease expiry (WALE) of 6.1 years as at 30 June 2015.

The manager for Ascendas REIT has indicated that it intends to maintain a gearing ratio of within 40% and will fund the acquisition via a combination of Australian onshore loans of approximately AUD600 million and the issuance of perpetual securities by the REIT.

“Distribution per unit accretion is expected to be about 3% to 3.5% depending on the ultimate cost of perpetual securities to be issued”, said Ascendas REIT in a statement on the proposed acquisition.

The acquisition is expected to complete in the fourth quarter of 2015. Upon completion, Ascendas REIT will own a total of 102 properties in Singapore, 26 logistics properties in Australia and two business park properties in China.

Units of the REIT last changed hands on the Singapore Exchange at SGD2.23.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.