Ascendas Reit acquires 25 per cent stake in Galaxis for S$102.91 million
Ascendas Reit acquires 25% stake in Galaxis for S$102.91 million
Singapore, 31 March 2020 – Ascendas Funds Management (S) Limited, as the manager (the Manager) of Ascendas Real Estate Investment Trust (Ascendas Reit), is pleased to announce that Ascendas Reit has acquired a 25% equity stake in the holding entity for Galaxis (the Property) for S$102.91 million (the Purchase Consideration), from MBK Real Estate Asia Pte Ltd (the Vendor), a wholly-owned subsidiary of Mitsui & Co, Ltd. (the Acquisition). Galaxis is a business park property located at 1 & 3 Fusionopolis Place, in Singapore’s one-north precinct.
Mr William Tay, Executive Director and Chief Executive Officer of the Manager said, “Galaxis is strategically located in the heart of the bustling Fusionopolis cluster in one-north and has direct access to the MRT station. The acquisition of the 25% stake in Galaxis is accretive to Ascendas Reit’s distribution per Unit and is transacted at an attractive net property income yield of 6.2% considering the allowable 30% White Component for the site. Galaxis, which also hosts highly reputed tenants, fits well with our strategy to invest in well-located and high-quality business park properties in Singapore and will strengthen Ascendas Reit’s overall portfolio.”
Details of the Acquisition
HSBC Institutional Trust Services (Singapore) Limited, as trustee of Ascendas Reit, has today entered into a Share Purchase Agreement with the Vendor for the purchase of 25% of the issued share capital of Ascendas Fusion 5 Pte Ltd (AF5PL), the holding entity for Galaxis. The remaining 75% equity stake in AF5PL is held by a wholly-owned subsidiary of CapitaLand Limited, Ascendas Reit’s Sponsor.
The Purchase Consideration is estimated to be S$102.91 million1, and is based on 25% of the adjusted net asset value2 (Adjusted Net Asset Value) of AF5PL as at the date of completion, being 31 March 2020. The Adjusted Net Asset Value takes into consideration the agreed value of the Property of S$630.0 million (Agreed Property Value), which is about 3.1% lower than the independent market valuation of the Property of S$650.0 million as at 26 March 20203.
Ascendas Reit is expected to incur an estimated total transaction cost of approximately S$2.99 million which includes stamp duty, professional advisory fees, and acquisition fees payable to the Manager in cash (being 1.0% of the 25% of Agreed Property Value, which amounts to approximately S$1.575 million).
In the first year of the Acquisition, the Property is expected to generate a net property income yield of approximately 6.2% and 6.1% pre-transaction costs and post-transaction costs respectively4.
Ascendas Reit has funded the Acquisition with a combination of debt and internal resources. The pro forma impact on distribution per Unit (DPU) for the 12 months ended 31 December 2019 would be an estimated improvement of between 0.013 to 0.1105 Singapore cents assuming the Acquisition was completed on 1 January 2019.
About The Property
Galaxis is a premium business park property, situated at the heart of Fusionopolis, one-north, Singapore’s hub for infocomm technologies (ICT), media, physical sciences and engineering R&D industries. The Property has direct access to the one-north MRT station and is a 5-minute drive to Ayer Rajah Expressway and a 15-minute drive to the Central Business District.
The Property has a gross floor area of 68,835 sqm and a net lettable area (NLA) of 60,752 sqm. It is sited on a land area of 19,283 sqm zoned for Business Park use with a 30% White Component6. The remaining lease tenure of the land is around 52 years.
Galaxis comprises a 17-storey building with business park (NLA of 44,319 sqm) and office space (NLA of 10,305 sqm), a two-storey retail and F&B podium (NLA of 4,106 sqm), a five-storey building with work lofts (NLA of 2,022 sqm) and a two-storey basement carpark. It has a BCA Green Mark Platinum rating.
Completed in 2015, the Property is 99.6% occupied by reputable tenants such as Canon, Oracle, and Sea (formerly Garena). As at 26 March 2020, the weighted average lease to expiry of the Property is 2.5 years.
1 Purchase Consideration is subject to post-completion adjustments provided for in the Share Purchase Agreement.
2 Adjusted for net liabilities.
3 The valuation was commissioned by HSBC Institutional Trust Services (Singapore) Limited (as trustee of Ascendas Reit) and was carried out by CBRE Pte Ltd using the Income Capitalisation and Discounted Cash Flow approaches.
4 Ascendas Reit’s share of net profits after tax in AF5PL will be part of the amount available for distribution to the Unitholders. Net property income yield is computed based on the estimated first year net property income of Galaxis after the Acquisition over the Agreed Property Value.
5 Based on illustrative loan-to-value range of 40% to 100%.
6 Allowable uses within the White component under the Urban Redevelopment Authority of Singapore’s development control guidelines include office, restaurant, shop etc. Source: Urban Redevelopment Authority of Singapore.