Ascendas REIT property, 1 – 5 Thomas Holt Drive, Macquarie Park in Sydney. (Ascendas REIT)

Ascendas REIT is acquiring the office property at 1 – 5 Thomas Holt Drive, Macquarie Park in Sydney for AUD288.9 million (USD218 million).

The suburban office blocks are 100% occupied with a weighted average lease expiry (WALE) of 4.5 years.

This will lengthen the REIT’s Australian portfolio’s WALE from 4.3 years to 4.4 years.

The leases are double net and have built in annual rental escalations of 3.25% to 3.75%.

Key tenants at the asset include Australian companies Metcash and Foxtel, amongst others.

Net property income (NPI) yield for the first year is approximately 5.9% and 5.6% pre- transaction costs and post-transaction costs respectively.

The annualised pro forma impact from the acquisition on Ascendas REIT’s FY2019 distribution per unit (DPU) is expected to be an improvement of 0.059 Singapore cents, assuming settlement in April 2019.

Ascendas REIT proposes to fund the acquisition with proceeds from the equity fund raising it conducted recently, debt facilities, and internal resources.

More details on the acquisition can be found here.

Ascendas REIT was last done on the SGX at SGD2.93, which implies a distribution yield of 4.9% according to data compiled on the Singapore REITs table.

By Shariffa Al-Habshee

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