SINGAPOREAN BECOMES ONE OF OUR LARGEST LANDLORDS
Written on the 18 September 2015 by Nick Nichols
SINGAPORE'S largest real estate investment trust (REIT) has snared a major portfolio of logistics assets held by Frasers Property Australia for more than $1 billion and elevated it to become one of Australia's largest landlords.
The deal, which comprises 26 properties in Melbourne, Sydney, Brisbane and Perth, comes a year after Frasers Property, formerly Australand, was acquired by Singapore-based Frasers Centrepoint.
The portfolio, jointly owned by Frasers and the Singapore Government's investment arm GIC, will be rolled into a new subsidiary, the Singapore-listed Ascendas REIT Australia, with the assets to be held by the Ascendas Logistics Trust.
The acquisition will be funded through $600 million in debt plus capital, with the deal also expected to boost state government coffers by about $50 million in stamp duty charges.
Ascendas says the deal has been struck on a net yield of 6.4 per cent pre-transaction costs in the first year, and 6 per cent when costs are taken into account.
Among the tenants in the portfolio are Wesfarmers, Mondelz, Pacific Brands, API, Nestlé and Officemax.
"We are excited by this unique opportunity to make a strategic investment in Australia," says Tan Ser Ping, executive director and CEO of Ascendas Funds Management, the Australian subsidiary appointed to manage the portfolio.
"The proposed acquisition, comprising 26 prime logistics properties located on freehold land in the key cities of Sydney, Melbourne and Brisbane, will establish Ascendas REIT as the 8th largest industrial landlord in Australia."
Ascendas describes the Australian industrial real estate market as 'mature and transparent' and one that 'provides opportunities for growth underpinned by domestic consumption and population growth'.
It says the acquisition also allows Ascendas to diversify its offshore investment income stream.
Once the Australian deal is settled, its foreign income will rise from 4 per cent currently received from Chinese assets to 14 per cent.
The acquisition comprises gross floor area of more than 630,000sqm across all properties with an occupancy rate of 94.4 per cent.
It also lifts Ascendas REIT's portfolio to 132 properties, with 102 in Singapore and two business parks in China.
Author: Nick Nichols