Ascendas Reit to acquire a new logistics property in Sydney for A$23.5 million
Singapore, 1 July 2020 – Ascendas Funds Management (S) Limited (the Manager), the Manager of Ascendas Real Estate Investment Trust (Ascendas Reit), is pleased to announce the Acquisition of a new logistics property to be developed on Lot 7, Kiora Crescent, Yennora, in Sydney, Australia (the Property) (the Acquisition), for A$23.5 million1 (S$21.1 million2) (the Purchase Consideration). The Property will be developed by Larapinta Project Pty Ltd (the Vendor).
Mr William Tay, Executive Director and Chief Executive Officer of the Manager said, “Despite the COVID-19 pandemic, Sydney continues to be the strongest industrial market in Australia underpinned by robust tenant demand and sustained levels of investor interest. The acquisition of this new prime grade logistics property gives Ascendas Reit greater exposure to the Sydney market and also enhances the quality of our portfolio.”
Details of the Acquisition
Perpetual Corporate Trust Limited as trustee of Ascendas Longbeach Trust No. 10 (indirectly wholly-owned by Ascendas REIT Australia) (the Trustee) has entered into agreements3 with the Vendor for the purchase of the freehold land at Lot 7, Kiora Crescent, Yennora and the ensuing development of the logistics property.
The Acquisition of the land has been completed and the development of the logistics property is expected to complete in the second quarter of 2021.
The Purchase Consideration of A$23.5 million, which comprises the land and development cost, is 19.8% lower than the “as if complete” market valuation of the Property (A$29.3 million as at 30 June 20204).
Ascendas Reit is expected to incur an estimated total transaction cost of A$1.43 million (S$1.29 million) which includes stamp duty, professional advisory fees, and acquisition fees payable to the Manager in cash (being 1% of the Purchase Consideration of A$23.5 million, which amounts to approximately A$0.235 million (S$0.211 million)).
Net property income yield5 for the first year is approximately 6.2% and 5.8% pretransaction costs and post-transaction costs respectively. The Acquisition is expected to be accretive to Ascendas Reit’s Distribution per Unit.
The Acquisition will be funded through internal resources and/or existing debt facilities.
Benefits of the Acquisition
The Property is well located in the established inner-western Sydney industrial precinct of Yennora, an area that is enjoying renewed growth given its proximity to central western Sydney and the trend towards last mile logistics.
The area is well serviced by the Hume Highway to the south and M4 Motorway to the North that links the west, east and south west of Sydney. The Property is approximately 26 km west of the Sydney Central Business District and is surrounded by logistics and industrial properties.
The quality of Ascendas Reit’s Australian portfolio will be further boosted by this prime grade logistics warehouse located on freehold land (26,632 sq m). With an approximate lettable floor area of 13,100 sq m, it is designed to be functional and efficient for a wide range of users.
Notes:
1 Includes 9.5 months of rental guarantee provided by the Vendor.
2 All conversions from Australian Dollar amounts into Singapore Dollar amounts in this press release are based on the 31 May 2020 exchange rate of A$1.00: S$0.89957.
3 Includes the sale and purchase agreement for the acquisition of land at Lot 7, Kiora Crescent, Yennora, and a development management agreement for the ensuing development of the Property.
4 The valuation was commissioned by Ascendas Funds Management (Australia) Pty Ltd and Perpetual Corporate Trust Limited (in its capacity as trustee of Ascendas Longbeach Trust No. 10), and was carried out by Knight Frank NSW Valuation & Advisory Pty Ltd using the capitalisation and discounted cash flow methods.
5 The net property income yields are derived from the estimated net property income expected in the first year of acquisition and includes a rental guarantee provided by the Vendor.