AIMS APAC REIT to Buy Singapore Industrial Building in $44M Deal

AIMS APAC REIT plans to buy an industrial building in Singapore’s city fringe in a S$56.7 million ($44 million) deal.

SGX-listed AA REIT entered into an option agreement to acquire the Framework Building in Aljunied from Framework Building Products, the trust’s manager said Friday in a release. The consideration includes the purchase price of S$45.8 million and an upfront land premium of S$10.9 million contributed by JTC Corporation, which regulates industrial development in the city-state.

The REIT sponsored by Sydney-based AIMS Financial Group is picking up the property near the Pan Island Expressway and Paya Lebar MRT interchange at a net property income yield of 8.1 percent, according to the manager.

“The proposed acquisition of the Framework Building is a strategic addition to our portfolio and reinforces AA REIT’s position as a disciplined, long-term investor in quality industrial assets,” said Russell Ng, CEO of the manager.

Sale and Leaseback

Situated at 2 Aljunied Avenue 1, the Framework Building in fact comprises two buildings, one built in 1993 and refurbished 2008 and the other completed in 2014, with a land tenure ending in August 2049. The property has a total net lettable area of 16,082 square metres (173,105 square feet) and a gross floor area of 18,662 square metres.

Anchored by the building products maker, the Framework Building is 97 percent occupied and supported by a three-year rental guarantee over the vacant area (amounting to 3 percent of GFA). AA REIT will lease back 70 percent of the GFA to Framework in years 1 to 5, then 22 percent of the NLA in year 6. The weighted average lease expiry is 4.1 years.

The asset is changing hands at S$3,526 ($2,743) per square metre of NLA and an 8 percent discount to an independent valuation by JLL.

Chairman George Wang said the deal aligns with AA REIT’s investment strategy of acquiring high quality, income-generating assets that enhance tenant and asset diversification and add to overall portfolio resilience.

“In an uncertain market environment, AA REIT remains well positioned to capture new acquisitions that meet our investment criteria in our core markets of Singapore and Australia to deliver sustainable long-term returns for unitholders.”

Rents at 29-Year High

Singapore’s JTC All Industrial rental index recorded its 19th straight quarterly rise in Q2, up 0.7 percent from the previous three months. The increase boosted the index to its highest level since Q2 1996 and marked a 24.6 percent climb from the Q3 2020 low, according to Colliers.

The multiple-user factory and business park segments led rental growth. Overall industrial occupancy saw a marginal decline to 88.8 percent, weighed by the warehouse segment, which saw occupancy fall 1.7 percent.

The price index grew 1.4 percent on a quarterly basis to its highest level since Q4 2015, representing a 26.9 percent increase from the last trough in Q3 2020.

“Singapore’s industrial real estate market continues to demonstrate resilience in the face of growing global uncertainty,” said Catherine He, head of research at Colliers Singapore. “While near-term risks related to tariffs and global trade may weigh on traditional  manufacturing, opportunities could emerge in specialised logistics, bonded storage and high-tech industrial formats.”