By all accounts, AIMS APAC REIT (AA REIT) appears to be making a transformational acquisition. At a price tag of A$463.2 million, or A$494 million including fees and other expenses, the Woolworths Headquarters outside of Sydney ticks all the boxes. The Property is wholly-leased to Woolworths for around 10 years, with up to 20 years extension options. The lease is accompanied by fixed rent step-ups at 2.75% pa. As a double-net leased property, the outgoings obligations are fully covered by the tenant.

Furthermore, Woolworths has spent A$50 million in capex for AEIs. For instance, the recent installation of new solar panels across the building roof areas provides the property with a sustainable and renewal energy source.

AA REIT’s assets under management will rise from $1.7 billion to $2.18 billion. Based on a funding combination of $207.5 million from perpetual securities raised in Aug at 5.375%, and debt of $272.4 million, the DPU accretion is likely to be 4.69%, taking pro forma DPU to 9.37 cents, from 8.95 cents recorded in FY2021 for the 12 months to March 31. “This is a Woolworths anchored asset and the cash flows are very secure. Ultimately, when we look at the combination of debt funding, which is just under 2%, it’s is a very attractive yield spread that we are achieving,” notes Russell Ng, incoming CEO of AA REIT’s manager.


To continue reading,

Sign in to access this Premium article.

Subscription entitlements:

Less than $9 per month
3 Simultaneous logins across all devices
Unlimited access to latest and premium articles
Bonus unlimited access to online articles and virtual newspaper on The Edge Malaysia (single login)

Stay updated with Singapore corporate news stories for FREE

Follow our Telegram | Facebook