Singapore-listed AIMS APAC REIT has agreed to acquire the Sydney headquarters of retailer Woolworths for A$463.3 million ($335.4 million), as the industrial-focused trust continues to branch out into business parks.
Consisting of three interconnected buildings, the Woolworths corporate campus is fully leased to Australia’s biggest supermarket operator and will be acquired at an initial net property income yield of 5.17 percent, AA REIT said Thursday in a filing with the Singapore Exchange. The seller is the local arm of South Korea’s Inmark Asset Management, which acquired the property from the Mirvac real estate group in 2016 for A$336.5 million.
George Wang, chairman of AA REIT’s manager, said the Woolworths acquisition would strengthen the trust’s foothold in Sydney’s resilient business park market.
“The asset sits on a rare nine-hectare freehold land, within the Norwest Business Park, with good connectivity and direct access to the Sydney CBD,” Wang said. “The precinct is also home to a thriving community of established domestic and multinational corporations such as Australia Post, Resmed, IBM and Optus and data centres for the Reserve Bank of Australia and Commonwealth Bank of Australia.”
Data Centre and More
Located 35 kilometres (21.7 miles) northwest of central Sydney, the Woolworths campus comprises Grade A office space, a data centre and amenities.
The 2005-vintage asset has a total site area of 90,010 square metres (968,860 square feet) and a net lettable area of 44,972 square metres, meaning AA REIT would pay roughly A$5,147 ($3,734) per square metre of NLA. The current NLA provides for development potential to about 180,000 square metres based on the maximum allowable gross floor area.
With a market capitalisation of about A$50 billion, Woolworths will be the biggest tenant in AA REIT’s portfolio upon completion of the transaction.
“This is a transformational acquisition for AA REIT, representing the largest asset in the REIT’s high-quality portfolio, and wholly leased to one of Australia’s largest companies listed on Australian Securities Exchange Ltd,” Wang said.
Diversifying From Industrial
AA REIT’s industrial-heavy portfolio includes 26 properties in Singapore and two in Australia. The Woolworths headquarters would join two other business parks among the trust’s current assets: 1A International Business Park in Singapore’s Jurong East area and Optus Centre in Sydney, acquired for A$377 million in 2014.
AA REIT is sponsored by AIMS Financial Group, a Sydney-based fund manager with over A$2 billion of completed asset acquisition and investment volume since 2009. The trust is managed by AIMS APAC REIT Management Ltd, which is wholly owned by the sponsor.
It’s a time of transition for the REIT manager’s top leadership, as head of investor relations Russell Ng prepares to assume the CEO role on 29 November. Ng succeeds Wee Lih Koh, who announced his resignation from AA REIT last month and quickly landed the chief executive job at SGX-listed Keppel REIT, starting on 1 December.
The opening at Keppel REIT, which is managed by an affiliate of Singapore’s Keppel Corporation, was occasioned by the sudden resignation of CEO Paul Tham in August.