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The purchase consideration, comprising the land and development cost, is in line with the property’s “as if complete” market valuation, which stood at A$110.9 million as at 1 August 2019.
Ascendas Real Estate Investment Trust (Ascendas Reit) is acquiring a suburban office property in Australia for A$110.9 million (S$104.4 million).
This comes after its indirectly wholly-owned unit entered into an agreement with ESR FPA (Wellington Road) to purchase the freehold land and subsequent development of suburban office building at 254 Wellington Road in Melbourne, revealed the Reit’s manager.
“This will be our fourth suburban office property in Australia. We are very pleased with this acquisition as it is well-located in the Monash Technology Precinct in Melbourne, has 65 percent of the space pre-committed for 10 years and is DPU accretive,” said Mr William Tay, executive director and CEO of the manager.
The purchase consideration, comprising the land and development cost, is in line with the property’s “as if complete” market valuation, which stood at A$110.9 million as at 1 August 2019.
The property is set to receive practical completion in the second quarter of 2020, after which automotive firm Nissan Motor Co. (Australia) will start a 10-year lease for 65.2 percent of space, with a built-in rent escalation of three percent per annum.
ESR FPA will continue to market the property’s remaining space as well as provide a three-year rental guarantee, starting from practical completion, for any remaining vacant space.
For the first year, net property income yield is around 5.8 percent and 5.7 percent pre-transaction costs and post-transaction costs respectively.
The manager noted that the acquisition’s annualised pro forma financial effect on FY2018/2019 distribution per unit is expected to be an improvement of 0.014 Singapore cents.
Including the property, Ascendas Reit will now own 36 properties in Australia and 97 in Singapore and 38 in the United Kingdom.
“The Australian portfolio’s pro forma weighted average lease term to expiry is expected to improve to 4.5 years from 4.3 years as at 30 June 2019,” revealed the manager.
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
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