Ascendas REIT is acquiring Philips APAC Center in Singapore under a leaseback scheme for a sale consideration of SGD104.8 million.
The asset is being acquired from electronics manufacturer Philips, who will lease back more than two-thirds of the asset once it is completed.
The asset serves as the company’s headquarters, and it is also occupied by three other tenants.
As at 30 June 2022, the asset has an occupancy rate of 95.7%.
“Singapore remains a key market for Ascendas REIT, making up approximately 60% of total assets under management”, said William Tay, CEO of Ascendas REIT’s manager.
“The acquisition of APAC Center is a natural addition to the portfolio, strengthening our technology and biomedical customer base and improving the overall resilience of the portfolio with its high occupancy of 95.7% and long WALE of 4.5 years”, he added.
The first year net property income yield of the asset is approximately 7.2% and 6.8% pre-transaction costs and post-transaction costs respectively.
The acquisition will be funded by Ascendas REIT through internal resources and existing debt facilities.
The pro forma impact on the DPU for the financial year commencing on 1 January 2021 and ended 31 December 2021 is expected to be an improvement of 0.045 Singapore cents, which represents a 0.29% accretion.
The acquisition is expected to complete in the second half of 2022.
On its part, Caroline Clarke, CEO and Executive Vice President, Philips ASEAN Pacific, indicated that the divestment stems from the move to sell its Signify and domestic appliances businesses, which was first announced in March 2021.
“The strategic divestments of the Signify and Domestic Appliances businesses were part of our transformation towards becoming a health technology leader, and the next logical step is to change our ownership of the APAC Center to reflect its multi-tenanted nature", said Clarke.
"This does not change our business operations in any way and Singapore will remain an important market for Philips and a thriving regional hub for our business, innovation and stakeholder collaboration", she added.
Ascendas REIT was last done on the Singapore Exchange at SGD3.02, which presently implies a distribution yield of 5.21% according to data on the Singapore REITs table.