510 Townsend Street, a property that will be acquired by Ascendas REIT. (Google Maps)

Ascendas REIT is acquiring two office properties in San Francisco for USD560.2 million (SGD768.0 million).

The properties are located at 510 Townsend Street, and 505 Brannan Street in the South of Market (SoMa) submarket.

“This acquisition allows us to plant a foothold in San Francisco, one of the most dynamic and progressive cities in the US”, said William Tay, CEO of Ascendas REIT’s manager.

“The properties are newly completed in 2017 and are fully leased to two high quality technology tenants, Stripe and Pinterest, for a long WALE of 9.1 years”, he added.

The structure of the leases is triple-net and have built-in rent escalations of 2% to 3% per annum, providing organic growth.

Net property income yield for the first year is approximately 4.9% and 4.8% pre- transaction costs and post-transaction costs respectively.

The annualised pro forma impact on FY2019 DPU is expected to be an improvement of 0.129 Singapore cents, assuming that the acquisition was completed on 1 April 2019.

The acquisitions will be financed with proceeds from an equity fundraising exercise (EFR) that will graise gross proceeds of approximately SGD1.2 billion, debt, and cash resources.

The EFR will comprise of a private placement that will be priced between SGD3.026 and SGD3.121, and a preferential offering that will be priced between SGD2.960 and SGD3.050.

Further details of these will be provided by the REIT in due course.

Ascendas REIT was halted from trading on the SGX upon request, and its last done price was SGD3.19.

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.