Woolworths Headquarters (AIMS APAC REIT)

AIMS APAC REIT (AA REIT) is acquiring the Woolworths Headquarters in New South Wales, Australia for AUD463.25 million (USD332 million).

The asset is being acquired from Inmark Asset Management Pty Ltd.

It is fully leased to Woolworths Group Limited (Woolworths), and it will be acquired at an initial net property income (NPI) yield of 5.17%.

The asset is a freehold, Grade A office campus with a balance lease term of 10 years that is subject to built-in rental escalation of 2.75% per annum.

“This is a transformational acquisition for AA REIT, representing the largest asset in the REIT’s high-quality portfolio, and wholly-leased to one of Australia’s largest companies listed on Australian Securities Exchange Ltd”, said George Wang, Chairman of AA REIT’s manager.

“Apart from being able to benefit from annual rental escalations and long-term capital appreciation, there is immense potential to unlock value as this property was designed to cater for future site expansion for additional buildings”, said the REIT.

Post-acquisition, Woolworths will become the largest tenant in AA REIT’s portfolio.

The acquisition will enlarge AA REIT’s portfolio by over 26.6% to SGD2.183 billion (USD1.5 billion) as well as raise the contribution of Australian freehold properties from 21.8% to 38.4%.

Its WALE of 10 years will provide additional resilience to the portfolio, lifting the overall occupancy rate to 95.9% and WALE from 3.98 years to 4.92 years on a pro forma historical basis for FY2021.

60% of the purchase consideration will be financed with debt, and net proceeds raised from the recent issuance of the SGD250 million perpetual securities.

The REIT’s manager may also consider funding the proposed acquisition by a combination of debt financing, acquisition fee units, net proceeds raised from the issuance of the perpetual securities, and new equity.

The final decision regarding the method of financing will be made by the manager at the appropriate time, taking into account the prevailing market conditions, the REIT added.

AIMS APAC REIT was last done on the SGX at SGD1.44, which implies a distribution yield of 6.25% according to data on the Singapore REITs table.

By Shariffa Al-Habshee

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