Ascendas REIT enters US logistics market with acquisition of 11 properties for $207.8 mil

Atiqah Mokhtar

21 October 2021 at 11:51 am·2-min read

The DPU-accretive deal is expected to complete in 4Q2021.

The manager of Ascendas REIT (A-REIT) has announced the proposed acquisition of 11 logistics properties in Kansas City, US for US $156 million ($207.8 million) on Oct 22. This marks the REIT’s first entry into the US logistic market.

“The strong market fundamentals driven by rising warehousing requirements for ecommerce fulfilment has led to record net absorption levels and rent growth across the country, says William Tay, executive director and CEO of the manager.

“We are confident of the growth potential of this portfolio given Kansas City’s geographically central location within the US and its well-developed transportation infrastructure,” Tay adds.

The 11 properties are located on freehold land and encompass a net lettable area of 200,908 sq m. The portfolio currently has a 92.6% occupancy rate across 27 customers, with a weighted average lease expiry of 2.8 years.

According to the manager, the current tenants have been in place for an average of 12.5 years, while the current leases also have built-in annual rental escalations ranging between 2.5-3%.

The properties are being purchased from third-party vendors ColFin 2017-11 Industrial Owner and ColFin Cobalt I-II Owner.

The manager estimates a net property income (NPI) yield for the first year post-acquisition of 5% on a post-transaction costs basis.

Proceeds from A-REIT’s recent divestments of three logistics properties in Australia will be used to partially finance the proposed acquisition, while the remaining balance will be financed through existing debt facilities.

Based on this funding structure, the transaction is expected to be distribution per unit (DPU) accretive. The pro forma impact based on FY2020 ended December financials is a DPU improvement 0.11 cents or 0.73%.

An independent valuation of the portfolio values the properties at US$156.3 million.

On a pro forma basis, the proposed acquisition will increase A-REIT’s proportion of logistics properties to 22%, or $3.5 billion, of its total investment properties of $16.2 billion. Upon completion, A-REIT will own 221 properties across Singapore, the US, Australia, the UK, and Europe.

The completion of the acquisition is expected to take place in 4Q2021.

Units in A-REIT closed up 2 cents or 0.66% higher at $3.06 on Oct 21.

Photo: Ascendas REIT

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