Ascendas Real Estate Investment Trust (Ascendas Reit) has entered into a share purchase agreement with two third-party vendors, Oxenwood Catalina Midco Limited and Oxenwood Catalina II Midco, to acquire 10 companies for about £200.02 million (S$358 million).
The firms own 12 logistics properties in the United Kingdom which have a total gross internal area of approximately 242,633 sq m and are sited on freehold and 999-year leasehold land.
A valuation report by Colliers International Valuation UK put the value of the properties as a whole at £207.32 million as at June 4.
The estimated total cost of the proposed acquisition to Ascendas Reit is approximately £205.01 million after taking into account the acquisition fee payable to its manager as well as estimated professional fees, insurance premiums, and other fees and expenses.
A refundable deposit of £20.72 million has been paid by Ascendas Reit upon entering the share purchase agreement.
"Ascendas Reit currently intends to appoint the subsidiaries of the sponsor of Ascendas Reit as asset managers to provide certain asset management services and other related services in respect of the properties upon completion of the proposed acquisition," the Reit said.
"The 12 well-located properties under the target portfolio will serve as a good entry portfolio given its geographic spread in key distribution centres across the United Kingdom."
With this, the Reit's contribution of overseas investment (by asset value) is expected to increase from 15 per cent to 17 per cent, while its tenant base will include more quality tenants, including DHL, Secretary of State for Communities and Local Government and Amazon.
The target portfolio's long weighted average lease to expiry (WALE) of 14.6 years will also extend Ascendas Reit's portfolio WALE of 4.2 years (as at March 31, 2018) to 4.4 years.
In the first year, the properties are expected to generate a net property income yield of approximately 5.22 per cent (after taking into account the transaction costs). The proposed acquisition will be funded through pound sterling-denominated loans, it added, as a natural hedge against foreign exchange risk.