Ascendas REIT Buys Out Mitsui Stake in SG Business Park for S$103M

Ascendas Real Estate Investment Trust has acquired a 25 percent ownership interest in a Singapore business park for S$102.91 million ($72 million), after buying out the company’s Japanese development partner, according to an announcement by the SGX-listed REIT.

The manager of the S$12.8 billion trust, which is sponsored by property giant CapitaLand, announced that it had completed the share purchase of a quarter stake in Galaxis from Japanese conglomerate Mitsui & Co.

Located in the 200-acre master-planned One-North, the REIT is betting on the maturing tech hub to offer stable rental incomes from the research and development firms that favour the district near National University of Singapore.

The acquisition comes just one month after Ho Bee Land won a tender for a 41,366 square metre (‭‪445,260 square foot) biomedical facility known as Biopolis Phase 6 in One-North, having placed the highest bid of S$223.6 million for the last December.

Adding to a Global Portfolio

Located at 1 & 3 Fusionopolis Place in One-North, Galaxis comprises a 17-storey building with light industrial and office space, a two-storey retail podium, and a five-storey property containing work lofts.

The five-year-old complex, which was developed by Ascendas-Singbridge in partnership with Mitsui & Co, has a combined net leasable area of 60,752 square metres (653,929 square feet), and is currently 99.6 percent occupied to tenants including Canon, Oracle and digital services company Sea, with a weighted average lease to expiry period of 2.5 years.

The remaining 75 percent ownership interest in the business park will continue to be owned by CapitaLand, which merged with Ascendas–Singbridge in a $8 billion deal nine months ago.

“Galaxis is strategically located in the heart of the bustling Fusionopolis cluster in One-North and has direct access to the MRT station,” said William Tay, executive director and chief executive officer of the manager.

The REIT manager noted that the property is expected to generate a net income yield of 6.1 percent in the first year of the acquisition after taking into account the S$3 million in transaction costs and a S$1.6 million fee paid to the manager in cash.

“Galaxis, which also hosts highly reputed tenants, fits well with our strategy to invest in well-located and high-quality business park properties in Singapore and will strengthen Ascendas Reit’s overall portfolio,” said Tay.

Going Big on Biz Parks

The acquisition continues a run of business park acquisitions by Singapore players over the past five months, as investors target the steady yields offered by leasing suburban offices to major corporates.

Just over one month ago, CapitaLand agreed to acquire a business park in the UK for £129 million ($160 million). Based on the combined net leasable area of 367,000 square feet for the property outside of London, the company agreed to pay £351 per square foot for the eleven-office campus.

A month before that acquisition, another Singapore player, Frasers Property, signed a sale and purchase agreement to acquire another business park in suburban London, The developer controlled by Thai magnate Charoen Sirivadhanabhakdi paid £135 million to add the 272,000 square foot property to its existing set of six UK business parks.

In a deal agreed in November last year, Ascendas REIT boosted its portfolio by acquiring 30 business park assets in the US and Singapore from CapitaLand for S$1.66 billion ($1.22 billion).