Inits latest expansion beyond the Asia-Pacific, Ascendas-Singbridge Group has bought a portfolio of 33 high-quality office properties in the US for an undisclosed sum, marking its entry into the US market.
These properties – spread across Portland, Raleigh and San Diego – have a total net lettable area of about 3.3 million sq ft, and are centrally located in the three cities with an overall portfolio occupancy rate of above 90 per cent, the company said in a Friday statement.
Tenants, which include Nike and Oracle, span industries like technology, aerospace and biotechnology. Analysts said the deal size is difficult to estimate without knowledge of the exact properties purchased, but one who declined to be named said it might exceed US$1 billion.
This follows Ascendas Reit’s first entry into Europe in August with its purchase of 12 logistics properties in the UK in a deal worth £207.27 million (S$368.7 million).
Ascendas-Singbridge Group, a sustainable urban development and business space solutions provider owned by Temasek Holdings and JTC Corporation, is the sponsor of the business space and industrial real estate investment trust, as well as of Ascendas India Trust and Ascendas Hospitality Trust.
Chief investment officer He Jihong told The Business Times that the entry in the US and UK is meant to diversify Ascendas-Singbridge’s portfolio.
Globally, it has assets under management of over S$20 billion, and now has projects in 11 countries, counting Australia, China and Indonesia among its Asia-Pacific markets.
“The US and UK property markets are transparent and well-governed by the rule of law. They provide attractive investment opportunities, given their depth and liquidity, allowing the Group to expand and achieve scale beyond our existing markets,” Ms He said.
“The mature and developed nature of these markets will also allow us to diversify our overall portfolio. We remain committed to the Asia-Pacific and will continue to focus on growing our businesses in existing markets.”
Ascendas-Singbridge will also open offices in San Francisco and London to expand its footprint in the US and Europe, with services such as asset management and business development. Ms He said Ascendas-Singbridge plans to focus on asset classes like business parks, industrial and hospitality sectors in the two markets, which play to its core strengths.
In the US, it is optimistic about the office property market, and will target high-growth markets driven by “innovation clusters” in technology, biotech, healthcare and telecommunications.
“We remain highly selective on locations with favourable market dynamics and will continue to target high growth submarkets similar to those of this recent portfolio acquisition,” she said.
In the UK, Ascendas-Singbridge said the properties acquired in August will fulfill what it sees as a rising demand for supply chain and logistics services due to the rise of e-commerce activities.
When asked about potential acquisitions in Europe and the rest of the UK, she would only say that Ascendas-Singbridge is “always on the lookout for attractive and strategic opportunities that play to our core strengths, and will continue to explore new markets and options.”
When asked whether the US buys could pave the way for it to create an office Reit or list its overseas properties in a Reit, Ms he said: “As a long-term investor, we continually explore options to optimise the returns for our stakeholders. Our capital recycling decisions will take into consideration our overall strategy and market conditions, among other factors.”
But market observers believe Ascendas-Singbridge’s purchase could pave the way for listing the US properties in a Reit here.
A 2015 media report said industry observers had suggested Ascendas-Singbridge could be eyeing prospects of putting together an office Reit in the medium term.
“The US is definitely an attractive market for the Reits to get into right now… it’s a very deep market for office space or data centres,” said one analyst who declined to be named. “It makes sense only if the valuation of the asset is sizeable, I don’t think anyone is going to look at a Reit under S$1 billion.”
“The Reit market has evolved and matured and in 2018, we have pure play Reit listings with assets from US, Europe, India and Australia,” DBS analyst Derek Tan said.
Given the market’s maturity and investor base, he said it would not be surprising if Ascendas-Singbridge took this route.