CapitaLand Ascendas REIT (Ascendas REIT) is acquiring an asset in Singapore’s one-north district for SGD218.24 million and will partially fund this with proceeds from a private placement.
The acquisition and placement were announced by the REIT on 16 May.
The asset is known as the Shugart and it comprises a six-storey podium and a nine-storey tower.
It is Seagate’s primary R&D location outside the United States, said Ascendas REIT.
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The asset is being acquired with a lease term of 10 years with Seagate and it comes with built-in rent escalation of 2.5% per annum.
It is fully occupied and its weighted average lease expiry (WALE) is 10 years, which will uplift the REIT’s overall portfolio WALE from 3.8 years to 3.9 years.
The first year net property income yield of the acquisition is approximately 8.3% and 7.8% pre-transaction costs and post-transaction costs, respectively.
“This acquisition involves the leaseback of the property to Seagate for 10 years, with an option for an additional 10 years, which will generate an attractive long-term stable return”, said William Tay, CEO of the REIT’s manager.
To partially fund the acquisition, the REIT has launched a private placement exercise that will raise at least SGD450 million.
The issue price will be between SGD2.713 and SGD2.769.
Upon completion, Ascendas REIT will own 231 assets comprising 98 properties in Singapore, 36 properties in Australia, 48 properties in the United States, and 49 properties in the United Kingdom and Europe.
Ascendas REIT was last done on the Singapore Exchange at SGD2.88, which presently implies a distribution yield of 5.47% according to data on the Singapore REITs table.