Ascendas REIT will redevelop 1 Science Drive in a joint venture with CapitaLand Development (CLD), with a total cost estimated at $883 million.
The process will start with A-Reit selling the asset into a joint venture for $103 million, which is 34% and 66% held by A-REIT and CLD respectively.
The asset occupies a site area of 31,856 sqm and when redeveloped, will have a “life science and innovation campus” with a total gross floor area of 116,200 sq m which will comprise of three interconnected Grade A buildings.
The gross plot ratio (GPR) of 3.6 represents a threefold intensification of the current maximum allowable GPR of 1.2.
There will be one 15-storey-tall and the other two 9-storey-tall - and an event plaza with retail, F&B and supporting amenities. It will provide 112,500 sq m of business park space and 3,700 sq m for retail and F&B uses.
The redevelopment will be fully completed by 2025 and the parties behind this project expect demand from tenants in new economy sectors such as biomedical sciences, digital and technology.
William Tay, CEO of the Manager of Ascendas Reit says that on a stabilised basis, the investment is expected to generate a net property income yield of approximately 6.3%, re-creating value for A-Reit’s unitholders.
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When completed in 2Q2025, DPU accretion from Ascendas REIT's 34% stake in the joint venture is likely to be 0.076 cents, or 0.5%.
This is based on the following assumptions. First, that the redevelopment was completed on Jan 1, 2020 and achieved an occupancy rate of more than 90% between Jan 1, 2020 and Dec 31, 2020.
Next, the redevelopment is funded at the joint-venture level based on a funding structure of 60% debt and 40% equity.
See also: CICT's manager proposes to acquire ION Orchard at $1.85 billion, subject to EGM
In FY2020, Ascendas REIT announced a DPU of 14.688 cents.
"We will also have the first right to acquire the remaining 66% interest when the redeveloped property achieves stabilised occupancy," he adds.
In addition, Tay indicates that Ascent which was redeveloped by CLD and completed in 2016, and 5 Science Park Drive, a redevelopment completed in 2019 are pipeline properties that Ascendas REIT is interested in acquiring.
Image: Ascendas REIT
