AA Reit to buy Gold Coast industrial property for A$38.5m

Boardriders Apac HQ in Burleigh Heads, Queensland, comprises a warehouse and office facility, as well as a two-storey retail building.
Boardriders Apac HQ in Burleigh Heads, Queensland, comprises a warehouse and office facility, as well as a two-storey retail building.PHOTO: AA REIT

SINGAPORE - AIMS Apac Reit (AA Reit) is expanding its footprint in Australia with a A$38.46 million (S$36.92 million) acquisition of a freehold industrial facility in Gold Coast, its manager announced on Wednesday morning (May 15) before the market opened.

In a press statement, its manager noted that AA Reit has entered into a sales and purchase contract with GSM Rocket Australia to purchase Boardriders Apac HQ, located in the suburb of Burleigh Heads, Queensland.

The deal amount was arrived after considering an independent valuation by CBRE Valuations Pty Ltd, which valued 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 in order 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 proforma basis, up from 33.7 per cent as at March 31, 2019.

The property will be leased to GSM Operations Pty Ltd 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 Pty Ltd, are subsidiaries of Boardriders Inc, a global actions sports and lifestyle firm that designs and distributes brands including Quiksilver, Billabong and Roxy.

The first year rental from the property is A$3 million, and will increase by 3 per cent per annum, with a rent review at mid-term 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 square metres (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 3 kilometres from Burleigh Heads Beach, and a less than 20-minute drive from Gold Coast Airport.

Koh Wee Lih, chief executive of the Reit manager said: "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 unitholders, the acquisition will be DPU accretive.

"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," added Mr Koh.

Upon completion of the acquisition, AA Reit will own a total of 27 industrial properties, of which 25 are located throughout Singapore, with one located in Gold Coast, Australia, and a 49 per cent interest in a property located in Macquarie Park, New South Wales, Australia.

As at 10.51am on Wednesday, units in AA Reit were trading at $1.39, up 0.7 per cent, or one cent, after the announcement.