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SINGAPORE (Sept 29): Ascendas REIT is scaling up its portfolio in the UK with the proposed acquisition of a portfolio of 26 logistics properties for £257.5 million ($459.2 million).
The properties are well-located in key logistics locations with about 70% of the portfolio’s gross internal area situated within the West Midlands, an important logistics hub located at the centre of UK’s motorway network.
In connection with the acquisition, Ascendas REIT (Europe), a direct wholly-owned entity of HSBC Institutional Trust Services (Singapore), as trustee of Ascendas REIT, on Friday entered into a sale and purchase agreement with Griffen Group UK Holding to acquire all the issued share capital of Griffin UK Logistics Fund and its nine wholly-owned subsidiaries which own the target portfolio.
Ascendas REIT is expected to incur an estimated transaction cost of about $12.12 million. This includes the acquisition fee of $4.58 million payable to the manager and professional fees, insurance premiums, and other fees and expenses of $7.54 million.
The target portfolio is 100% occupied. Its long WALE of 9.1 years will extend Ascendas Reit’s portfolio WALE of 4.3 years to 4.5 years.
The proposed acquisition is expected to generate a net property income yield of 5.39% post-transaction costs in the first year. Annualised pro forma financial effect of the proposed acquisition on FY17/18 distribution per unit would be an improvement of 0.0223 cents.
Completion is expected to take place in the fourth quarter of 2018. Including the proposed acquisition, Ascendas REIT will own a total of 98 properties in Singapore, 35 properties in Australia and 38 properties in the UK.
The UK properties will make up 8% of Ascendas Reit’s total portfolio asset value, up from 4%.
Year to date, units in Ascendas REIT are down 4% to $2.64.