Ascendas Reit acquires its fourth suburban office in Australia for A$110.9 million
Ascendas Funds Management (S) Limited, the Manager of Ascendas Real Estate Investment Trust, announced the acquisition of a suburban office building, to be constructed at 254 Wellington Road, in Melbourne, Australia, for A$110.9 million (S$104.4 million) from ESR FPA (Wellington Road) Pty Limited.
Details of the Acquisition
The Trust Company (Australia) Limited, as trustee of Ascendas Business Park Trust No.2 (indirectly wholly-owned by Ascendas Reit), has today entered into an agreement with the Vendor for the purchase of the freehold land and the subsequent development of the suburban office building at 254 Wellington Road.
The Purchase Consideration of A$110.9 million, which comprises the land and development cost, is in line with the “as if complete” market valuation of the Property (A$110.9 million as at 1 August 2019).
Ascendas Reit is expected to incur an estimated total transaction cost of A$1.3 million (S$1.2 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$110.9 million, which amounts to approximately A$1.109 million (S$1.044 million)).
The Property is expected to receive practical completion in 2Q 2020, upon which automotive company, Nissan Motor Co. (Australia) Pty Ltd, will commence a 10-year lease for 65.2% of the space. This lease has a built-in rent escalation of 3.0% per annum. The Vendor will continue to market the remaining space in the Property. From practical completion of the Property, the Vendor will provide a three-year rental guarantee for any remaining vacant space.
Net property income yield for the first year is approximately 5.8% and 5.7% pretransaction costs and post-transaction costs respectively. The annualised pro forma financial effect of the acquisition on FY18/19 distribution per Unit would be an improvement of 0.014 Singapore cents. The acquisition will be funded through internal resources and/or existing debt facilities.
Including the Property, Ascendas Reit will own 97 properties in Singapore, 36 properties in Australia and 38 properties in the United Kingdom. The Australian portfolio’s pro forma weighted average lease term to expiry is expected to improve to 4.5 years from 4.3 years as at 30 June 2019.
More details in
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