A-Reit completes $77m Aussie purchase

Ascendas Real Estate Investment Trust (A-Reit) has completed the A$76.6 million (S$76.6 million) acquisition of a logistics facility in Australia, its manager announced yesterday.

The total cost came in at A$82 million once transaction expenses of about A$5.4 million, including stamp duty, professional advisory fees and the acquisition fee payable to the manager, were factored in.

The manager said the deal was funded by gross proceeds from an equity fund-raising effort launched last year, which had a target of at least $408 million.

The property at 6-20 Clunies Ross Street in the western suburb of Pemulwuy in Sydney is A-Reit's 10th logistics facility in the city and its 27th in Australia.

It comprises a 36,220 sq m high clearance warehouse and a 2,359 sq m freestanding two-storey office/laboratory facility.

The manager noted in a statement last December that the property has characteristics similar to those of its earlier acquisitions in Australia, such as freehold land, a long weighted average lease expiry of 6.1 years and triple net leases.

Its tenants include two government-related entities - Australia Post, which has sub-leased its space to established Australian retailer Target for use as a major distribution facility, and New South Wales Police.

The acquisition is expected to generate a net property income yield of around 7.1 per cent pre-transaction costs and 6.6 per cent post-transaction costs in the first year.

In its latest quarterly results, A-Reit reported a 9.9 per cent jump in distribution per unit to 3.946 cents for the three months to Dec 31, up on the 3.59 cents in the same period a year ago.

Net property income grew 24.1 per cent to $142.2 million, while gross revenue rose 12.9 per cent to $193.8 million.

The manager had noted that A-Reit, with acquisitions of more than A$1 billion of properties, has gained a "strategic footprint" in the Australian logistics market.

It said it will keep looking for opportunities in Australia as demand for logistics space is expected to be strong, backed by a healthy job market, low interest rates, the lower Australian dollar and firm consumer spending.

A-Reit's latest acquisition joins a growing number of Australian property purchases made by Singapore companies as cooling measures in the home market continue to bite.

Boutique developer Roxy-Pacific, for instance, bought two residential sites in Sydney for a total of A$67.38 million in December, following an A$81 million acquisition of a commercial building there.

A version of this article appeared in the print edition of The Straits Times on February 23, 2016, with the headline 'A-Reit completes $77m Aussie purchase'. Subscribe