Ascendas REIT is acquiring a cold storage logistics facility at 1 Buroh Lane in Singapore for SGD192 million.
The asset was built seven years ago, and is located within the Jalan Buroh Food Zone where over 30 licensed food establishments are located, said the REIT.
It is located within a five-minute drive to Ayer Rajah Expressway and is in close proximity to Singapore’s major sea ports, Ascendas REIT added.
As at 30 June 2022, the asset is fully occupied by five tenants including a supermarket chain with a long WALE of 7 years and built-in rent escalations of 2% to 3% every three years.
The estimated net property income yield for the first year post acquisition is approximately 7% and 6.9% pre-transaction costs and post-transaction costs respectively.
On a pro forma basis, Ascendas REIT’s proportion of logistics properties in its portfolio will rise to 26% after the acquisition.
“This is our first cold storage facility investment in Singapore”, said William Tay, CEO of Ascendas REIT’s manager.
“This modern Grade-A five-storey ramp-up logistics facility is one of the best cold storage facilities in Singapore”.
“Featuring a good combination of chiller, freezer and ambient storage spaces, it caters to a diverse food and beverage storage requirements. We are confident to achieve good rental growth due to the limited supply and strong demand for these types of facilities”, he added.
Ascendas REIT will fund the acquisition through internal resources or existing debt facilities.
On this basis, the estimated pro forma impact on the DPU for FY2021 is expected to be an improvement of 0.086 Singapore cents or a DPU accretion of 0.56% assuming the acquisition was completed on 1 January 2021.
The transaction is expected to complete in the fourth quarter 2022, said the REIT.
Ascendas REIT was last done on the Singapore Exchange at SGD2.90, which presently implies a distribution yield of 5.43% according to data on the Singapore REITs table.