Ascendas REIT (A-REIT) has proposed to acquire the remaining 75% stake in Ascendas Fusion 5, the holding entity for Galaxis for a consideration of $534.4 million.
The proposed acquisition comes after the REIT’s acquisition of its initial 25% interest in March 2020, and now gives the REIT full control over the property.
It will enlarge the REIT’s exposure to business parks in one-north, and increase its total asset value by 17.6% to $4.87 billion.
A-REIT’s total net lettable area (NLA) will increase by 8.8% to 750,915 sqm.
As at March 31, Galaxis has an occupancy rate of 98.6%. It also has a rare remaining land lease tenure of about 51 years, considering JTC Corporation’s current practice of releasing shorter tenure land plots of around 20 to 30 years under the Industrial Government Land Sales Programme.
The acquisition is said to be accretive to A-REIT’s distribution per unit (DPU), with the pro forma impact on the REIT’s DPU for the FY ending Dec 31, to be an improvement of 5.9 cents, or 0.4% accretion to DPU.
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Based on the acquisition, net property income (NPI) yield for the first year is approximately 5.4% and 5.3% pre-transaction costs and post-transaction costs respectively.
The property has an agreed property value of $720.0 million, which is about 2% lower than the average of two independent market valuations of the property of $735.0 million as at April 30, 2018.
According to the manager of the REIT, Galaxis is a “prime example” of the type of assets that the REIT looks to acquire to achieve a stable, long-term revenue stream.
“We are excited to add Galaxis to our portfolio. It is a top-notch, high-end business park property that is strategically located with excellent connectivity in one-north,” says Dr Beh Swan Gin, chairman and non-executive independent director of the manager.
“Following the acquisition of our initial 25% interest in Galaxis in March 2020, this proposed acquisition will allow Ascendas Reit to have full ownership of the property. It will enlarge the business and science park portfolio in Singapore by 18% to $4.9 billion and increase the number of properties we have in the vibrant one-north business park to five,” adds William Tay, executive director and CEO of the manager.
Units in A-REIT closed 2 cents higher or 0.7% up at $3.12 on May 4.
