Ascendas Hospitality Trust (A- HTrust) has acquired the serviced apartments component of a mixed- use development in Melbourne for A$120 million (S$124 million).
It signed an agreement with Malaysian developer UEM Sunrise for 252 serviced apartments on levels 10 to 32 and common facilities for guests on level 9 and a restaurant on the ground floor of Aurora Melbourne Central.
The 92-storey development, which is UEM Sunrise's maiden project in Australia, has a gross development value of A$770 million.
The project, which is scheduled to be completed in 2019, is in the heart of Melbourne.
It comprises more than 120,000 sq m of built-up area, including 941 apartments, retail space and strata offices.
A-HTrust said the acquisition allows it to acquire a brand-new asset at an attractive net property income yield of about 7.6 per cent in its first year of operation.
The acquisition is expected to add value to the distribution per stapled security (DPS). Assuming A-HTrust had owned the serviced apartments component since the start of its last financial year, its DPS would have increased by 1.6 per cent to 5.14 Singapore cents.
UEM Sunrise has agreed to top up the shortfall in the event pre-determined gross operating profits during the first two years of operations are not met. This would provide some protection of the income stream for A-HTrust, which estimated that it would take two years for the operation of the serviced apartments to be stabilised.
Ascendas Hospitality Fund Management chief executive Tan Juay Hiang said the acquisition will strengthen A-HTrust's foothold in Australia, besides enhancing its existing portfolio and "potential synergy with our existing hotel in Melbourne".
"We believe this acquisition can also create value for our stapled security holders as it is expected to be accretive to DPS," added Mr Tan.
UEM Sunrise managing director and chief executive Anwar Syahrin Abdul Ajib said: "This is not UEM Sunrise's first strategic collaboration with the Ascendas Group. We are collaborating on a 60:40 joint venture with them to develop an integrated eco-friendly 519-acre Nusajaya Tech Park in Iskandar Malaysia, and phase 1 is scheduled to be completed next year."