Ascendas Reit continues to grow its Australian logistics portfolio with S$69.1 million acquisition
Ascendas Funds Management (S) Limited announced on 23 December its proposed acquisition of a new Australian logistics property, to be developed at 500 Green Road, Crestmead, in Brisbane, Australia, for S$69.1 million (A$70.3 million). The Property will be developed by Goodman Property Services (Aust) Pty Limited, a wholly-owned subsidiary of Goodman Limited.
Acquisition enhances overall quality of Australian logistics portfolio
Mr William Tay, Executive Director and Chief Executive Officer of the Manager said, “This acquisition extends our logistics footprint in key distribution markets that will benefit from the robust domestic consumption and e-commerce demand in Australia. In addition, the new logistics development is expected to achieve a 5 Star Green Star rating on completion, further enhancing the overall quality of our Australian portfolio.”
Key Merits of 500 Green Road
The Property is well located in Crestmead, approximately 32 kilometres south of the Brisbane CBD. Crestmead is an established hub for interstate, intrastate and metropolitan distribution given its close proximity to key motorways such as the Logan, Gateway and Pacific Motorways that provide connections to key population areas on the eastern seaboard.
There has been a lack of new high-quality logistics stock coming to the Brisbane market and the vacancy rate in the south corridor remains low at 2.4% (source: CBRE).
Designed to be highly efficient, the Property will have a flexible design that offers warehouse sizes from 9,000 square metres to 38,000 square metres. Key features include high ceiling height of 12.2 metres (ridge), LED lighting and solar panels on the roof structure. The Property is targeting a 5 Star Green Star Design & As Built rating by the Green Building Council of Australia.
The flexible design of the Property will allow Ascendas Reit to capture a wide spectrum of market demand which is underpinned by the large domestic consumption and growing e-commerce sector. In the 12 months to September 2020, around 12.0% of Australia’s total retail trade estimate was spent on online retail, which is about 38.7% higher than the 12 months to September 2019.
500 Green Road will be Ascendas Reit’s tenth logistics property in Brisbane. Total net lettable area of the Australian logistics portfolio in Brisbane is expected to increase by approximately 21% to 220,532 sqm.
Details of the Proposed Acquisition
The Acquisition Consideration of S$69.1 million (A$70.3 million), which comprises the land and development cost, is in line with the “as if complete” market valuation of the Property at S$69.1 million (A$70.3 million).
Ascendas Reit is expected to incur an estimated transaction cost of S$1.4 million (A$1.4 million) which includes stamp duty, professional advisory fees, and acquisition fees payable to the Manager in cash (being 1% of the Acquisition Consideration, which amounts to approximately S$0.691 million (A$0.703 million)).
Net property income (NPI) yield for the first year is approximately 5.6% and 5.4% pre-transaction costs and post-transaction costs respectively. The annualised pro forma impact on FY2019 distribution per Unit (DPU) would be an estimated improvement of 0.014 Singapore cents assuming the Proposed Acquisition was acquired and completed on 1 April 2019.
For the purpose of the Proposed Acquisition, Ascendas Longbeach Trust No. 12, an indirectly wholly-owned Australian trust of Ascendas REIT Australia, was established.
The Trust Company (Australia) Limited as trustee of Ascendas Longbeach Trust No. 12 has entered into a land sale agreement with the custodian for GAI2 Crestmead Trust, the trustee of which is Goodman Funds Management Australia Limited, for the acquisition of the freehold land at 500 Green Road, and a development management agreement with the Developer for the ensuing development of the Property.
The acquisition of the land has been completed today and the development of the Property is estimated to complete in 4Q 2021. The Developer will provide a 2.5-year rental guarantee from the completion of the Property for any vacant space.
The Proposed Acquisition which will enhance the Reit’s Australian logistics portfolio will be funded by Ascendas Reit through internal resources and/or existing debt facilities.
Ascendas Real Estate Investment Trust (Ascendas Reit) is Singapore’s first and largest listed business space and industrial real estate investment trust. It was listed on the Singapore Exchange Securities Trading Limited (SGX-ST) in November 2002.
As at 30 September 2020, investment properties under management stands at S$12.95 billion, comprising 198 properties across the developed markets of Singapore, Australia, the United Kingdom and the United States. Ascendas Reit’s portfolio includes business and science parks, suburban office properties, high-specifications industrial properties, light industrial properties, logistics and distribution centres, and integrated developments, amenities and retail properties.
These properties house a tenant base of more than 1,450 international and local companies from a wide range of industries and activities, including research and development, life sciences, information technology, engineering, light manufacturing, logistics service providers, electronics, telecommunications, manufacturing services and back-room office support in service industries. Major tenants include Singtel, DSO National Laboratories, Citibank, DBS, CareFusion, Wesfarmers, JPMorgan and A*STAR Research Entities.
Ascendas Reit is listed in several indices. These include the FTSE Straits Times Index, the Morgan Stanley Capital International, Inc (MSCI) Index, the European Public Real Estate Association/National Association of Real Estate Investment Trusts (EPRA/NAREIT) Global Real Estate Index and Global Property Research (GPR) Asia 250. Ascendas Reit has an issuer rating of ‘A3’ by Moody’s Investors Service.
Ascendas Reit is managed by Ascendas Funds Management (S) Limited, a wholly-owned subsidiary of Singapore-listed CapitaLand Limited, one of Asia’s largest diversified real estate groups. Ascendas REIT Australia and its sub-trusts, are managed by Ascendas Funds Management (Australia) Pty Ltd, which is a wholly-owned subsidiary of Ascendas Funds Management (S) Limited.