Galaxis, partly owned by Ascendas REIT. (Photo: Google Maps)

Ascendas REIT has acquired a 25% equity stake in the holding entity for Galaxis for SGD102.91 million.

Galaxis is a business park at 1 & 3 Fusionopolis - Singapore’s hub for infocomm technologies, media, physical sciences and engineering R&D industries.

The stake has been purchased from MBK Real Estate Asia Pte Ltd, a wholly-owned subsidiary of Mitsui & Co, Ltd.

The remaining lease tenure of the land is around 52 years.

“The acquisition of the 25% stake in Galaxis is accretive to Ascendas REIT’s distribution per unit and is transacted at an attractive net property income yield of 6.2% considering the allowable 30% white component for the site”, said Mr William Tay, CEO of the REIT’s manager.

“Galaxis, which also hosts highly reputed tenants, fits well with our strategy to invest in well-located and high-quality business park properties in Singapore and will strengthen Ascendas REIT’s overall portfolio”, he added.

A remaining 75% equity stake in Galaxis’ holding entity is held by a wholly-owned subsidiary of CapitaLand Limited, Ascendas REIT’s sponsor.

The purchase consideration is a discount of about 3.1% to an independent valuation.

Ascendas REIT is expected to incur an estimated total transaction cost of approximately SGD2.99 million from the acquisition.

The REIT has funded the acquisition with a combination of debt and internal resources.

The pro forma impact on distribution per unit for the 12 months ended 31 December 2019 would be an estimated improvement of between 0.013 to 0.1105 Singapore cents assuming the acquisition was completed on 1 January 2019.

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.