Aims Apac Reit (AA Reit) is expanding its footprint in Australia with the acquisition of a freehold industrial facility in the Gold Coast for A$38.46 million (S$36.4 million), its manager announced yesterday before the market opened.
In a press statement, its manager said that AA Reit has entered into a sales and purchase contract with GSM Rocket Australia to buy Boardriders Apac HQ, located in the suburb of Burleigh Heads, Queensland.
The property is acquired with a headline yield of 7.8 per cent. The deal amount was arrived at after considering an independent valuation by CBRE Valuations, which put the property at A$38.46 million.
After including stamp duty payable and other transaction costs, the total estimated cost of the acquisition is about A$41.5 million.
This is expected to be funded mainly from Australian dollar debt facilities to maintain a natural currency hedge on the acquisition, the Reit manager said.
Assuming that the transaction will be fully funded by debt, AA Reit's aggregate leverage post-acquisition will increase to 35.5 per cent on a pro-forma basis, up from 33.7 per cent as of March 31.
The property will be leased to GSM Operations for 12 years on a triple net lease basis, which is a lease structure where the master tenant is responsible for outgoings of the property, including repair and maintenance costs, insurance, and taxes, among other things.
Both the vendor, GSM Rocket Australia, and the tenant, GSM Operations, are subsidiaries of Boardriders, a global actions sports and lifestyle firm that designs and distributes brands such as Quiksilver, Billabong and Roxy.
The first-year rental from the property is A$3 million, and will increase by 3 per cent a year, with a rent review at midterm of the lease, the manager said.
Under the contract, the tenant also has an option to renew the lease for another five years.
The development, which sits on a land area of 33,300 sq m, with a total net lettable area of 14,833 sq m, comprises a warehouse and office facility, as well as a two-storey retail building.
Notable properties in the vicinity include Stockland Burleigh Heads Shopping Centre, and the upcoming Kaufland giant supermarket.
The property is also situated about 3km from Burleigh Heads Beach, and is a less-than-20-minute drive from Gold Coast Airport.
Said Mr Koh Wee Lih, chief executive of the Reit manager: "The proposed acquisition represents an opportunity to further diversify and strengthen our portfolio with a strategic addition that offers a strong tenant profile, and provides income stability to AA Reit.
"In line with our strategy to build a high-quality, diversified portfolio of assets that creates long-term value for our unit holders, the acquisition will be DPU accretive," he said.
He added: "The outlook for the Gold Coast economy remains positive, as the region is currently experiencing growth across key economic factors, including strong population growth, investment into major infrastructure developments and an increase in both domestic and offshore tourism into the region. This investment will enable us to expand AA Reit's footprint in a market that offers solid long-term growth."
On completion of the acquisition, AA Reit will own a total of 27 industrial properties, 25 of them in Singapore and the other two in Australia.
AA Reit shares closed at $1.40 yesterday, up 1.45 per cent.