Ascendas Reit buys Aussie logistics portfolio from GIC, Frasers Property Australia for $1.01b

SINGAPORE - Mainboard-listed Ascendas Reit has acquired a portfolio of 26 logistics properties in Australia for A$1.01 billion (S$1.01 billion) from the real estate arm of GIC and Frasers Property Australia Pty, its Reit manager announced on Friday (Sept 18).

The purchase price is subject to post-completion adjustments.

Said Mr Tan Ser Ping, executive director and CEO of the Reit manager: "The proposed acquisition, comprising 26 prime logistics properties located on freehold land in the key cities of Sydney, Melbourne and Brisbane, will establish A-Reit as the eighth largest industrial landlord in Australia.

"In addition, this will further enhance our customer base with high calibre end-users (such as Wesfarmers, Mondelez, Pacific Brands, API, Nestle, Officemax) and multinational third-party logistics tenants (such as CEVA, DB Schenker, and Linfox). It also diversifies A-Reit's portfolio geographically."

The proposed acquisition is expected to generate a net property income yield of approximately 6.4 per cent pre-transaction costs in the first year (6.0 per cent post-transaction costs).

The portfolio has a current occupancy rate of of 94 per cent and a committed weighted average lease expiry of 6.1 years as at June 30.

The transaction is expected to complete in the fourth quarter of 2015.

The Reit manager intends to fund the proposed acquisition with a combination of Australian onshore loans of approximately A$600 million and the issuance of perpetual securities. Funding the proposed acquisition with Australian dollar debt is aimed at achieving a natural hedge against foreign exchange risk.

Distribution per unit accretion is expected to be about 3 per cent to 3.5 per cent depending on the ultimate cost of the perpetual securities to be issued.