A-REIT to acquire A$1b logistics portfolio in Australia

Industrial landlord Ascendas Real Estate Investment Trust (A-REIT) is set to acquire 26 logistics properties in Australia for A$1.013 billion (S$1.013 billion) in a move to diversify geographically, its manager Ascendas Funds Management announced on Friday (Sep 18).

This will be subject to post-completion adjustments, with the money payable to the real estate arm of GIC and Frasers Property Australia through their controlled subsidiaries or affiliates.

The acquisition is expected to generate a net property income yield of approximately 6.4 per cent pre-transaction costs in the first year, and 6.0 per cent post-transaction costs. The Target Portfolio has a committed weighted average lease expiry (“WALE”) of 6.1 years as at Jun 30 this year.

The acquisition is A-REIT’s first in Australia. The properties are located on freehold land in Sydney, Melbourne, Perth and Brisbane, and the portfolio has 24 tenants with 30 triple net leases, said Mr Tan Ser Ping, Executive Director and Chief Executive Officer of Ascendas Fund Management.

The proposed acquisition is expected to be completed in the fourth quarter of 2015.

Ascendas Fund Management said it intends to fund the acquisition with a combination of Australian onshore loans of approximately A$600 million, together with the issuance of perpetual securities by A-REIT.

When the acquisition is complete, overseas investment will account for 14 per cent of A-REIT’s portfolio, up from 4 per cent currently. A-REIT had said previously it wants overseas markets to account for 20 to 30 per cent of its portfolio.

Source : Channel NewsAsia – 18 Sep 2015

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