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Ascendas Real Estate Investment Trust’s (REIT) acquisition of 26 logistics properties in the UK for a total of £257.5 million (S$459.2 million) is seen as a positive and strategic move by multinational investment bank Jefferies, reported Singapore Business Review.
Despite risks arising from the UK’s separation from the European Union (EU), the former’s logistics industry is considered more resilient than its office and retail property segments as logistics is intertwined with local consumption, noted Jefferies analyst Krishna Guha.
Aside from leveraging on the growing popularity of e-commerce, there is also strong demand for such assets amid limited supply. In fact, Guha pointed out that the average logistics take-up increased from about 7.0 percent between 2009 and 2013 to around 20 percent by 2015 to 2017.
As of the second quarter, prime yields of logistics assets in the UK also remained stable at 5.2 percent, according to data from property consultancy Cushman and Wakefield.
In addition, Guha revealed that Ascendas REIT carried out the acquisition at a time when the Singapore dollar has strengthened against the UK pound by approximately 33 percent over the past 10 years.
“These transactions are likely to help the REIT build a network which can help in deal sourcing and capital recycling in future,” said Guha.
The 26 logistics properties are being acquired by purchasing all the issued share capital of Griffin UK Logistics Fund and its nine wholly-owned units.
With a combined gross internal area of 266,184 sq m, the assets are situated in established industrial areas within the West Midlands, South East England, North West England, the Humber and Yorkshire.
All are fully tenanted and have a long weighted average lease expiry (WALE) of 9.1 years.
The acquisition is expected to be completed this quarter.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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