SINGAPORE (Oct 3): The manager of Ascendas REIT (AREIT) has agreed to purchase the freehold land and the subsequent development of the suburban office building in Melbourne, Australia, for A$110.9 million ($104.4 million).
Located at 254 Wellington Road, the seller is ESR FPA (Wellington Road) and the property will be its fourth suburban office in the city.
The purchase consideration comprises the freehold land and development cost as well as the estimated total transaction cost of A$1.3 million which includes stamp duty, advisory fees, and acquisition fees payable to the manager in cash.
The property is expected to receive practical completion in 2Q20, upon which Nissan Motor Co (Australia) will start a 10-year lease for 65.2% of the space. This lease has a built-in rent escalation of 3.0% per annum.
The remaining space will also be marketed by the vendor will continue to market the remaining space. From practical completion of the property, the vendor will provide a three-year rental guarantee for any remaining vacant space.
Net property income yield for the first year is estimated to be 5.8% and 5.7% pre-transaction costs and post-transaction costs respectively. The annualised pro forma financial effect of the acquisition on FY18/19 distribution per unit would be an improvement of 0.014 cent.
The acquisition will be funded through internal resources and existing debt facilities, says AREIT's manager.
Following the acquisition of this property, AREIT will own 97 properties in Singapore, 36 in Australia and 38 in UK.
Units in AREIT closed at $3.08 on Thursday.
