Ascendas REIT property in Singapore, One@Changi City. (Photo: Ascendas REIT)Ascendas REIT property in Singapore, One@Changi City. (Photo: Ascendas REIT)

Singapore-listed industrial REIT, Ascendas REIT, (SGX:A17U) announced on 9 December that it is acquiring a property located at 1 Changi Business Park Central 1 for SGD420 million.

The property, more commonly known as One@Changi City, is a 9-storey business park building with a net lettable area (NLA) of 63,106 square metres. One@Changi City is located next to the Expo MRT station and currently has 53 years remaining on its land tenure.

The property, which is 97.1% occupied, is being acquired from Ascendas Frasers Pte Ltd, a 50-50 joint-venture between Ascendas Development Pte Ltd and a wholly-owned subsidiary of Frasers Centrepoint Limited.

CEO of the REIT’s manager, Tan Ser Ping, has described One@Changi City’s location as being in the heart of Changi Business Park. “The business park tenants enjoy access to a wide array of amenities such as food and beverage outlets, hotel and conference facilities, which are all within walking distance”, he said.

“Including this acquisition of One@Changi City, Ascendas REIT will have seven properties within Changi Business Park, reinforcing its presence and market share in the business park segment in the eastern region of Singapore”, Tan added,

After factoring in acquisition costs, One@Changi City is expected to generate a net property income yield of approximately 5.9% in the first year of ownership. “92% of the leased space at the property is about 14% below current market rent and there may be potential for future rental growth”, said the REIT.

One@Changi City has a weighted average lease expiry (WALE) of 4.58 years and will extend Ascendas REIT’s aggregate portfolio WALE to 3.86 years from 3.83 years.

Subject of unitholders’ approval, approximately SGD210.0 million of the acquisition is proposed to be paid in the form of new units that will be issued to the seller as consideration units.

“The issuance of consideration units will enable Ascendas REIT to maintain a healthy balance sheet, and further align the interest of its sponsor, Ascendas Group, with that of Ascendas REIT and its unitholders”, said the REIT in its announcement on 9 December.

The acquisition is expected to be completed within the financial year, said Ascendas REIT. Units of Ascendas REIT last changed hands on the Singapore Exchange at SGD2.38.

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.