Singapore-based Ascendas Funds Management announced on Friday that it has agreed to acquire 26 logistics properties in the UK for Ascendas REIT from Griffin UK Logistics Fund Limited (GULF) for GBP 257.46 million ($335.4 million).
The deal follows the REIT’s entry into the UK market on 26 July, when it agreed to acquire 12 logistics properties for GBP 200 million.
The latest acquisition will increase logistics’ share of Ascendas REIT’s assets to 30 percent on completion, up from 22 percent prior to the earlier deal, which expanded the REIT’s portfolio beyond Singapore and Australia for the first time. The manager has recently added another Australia property, further diversifying its portfolio away from Singapore.
Betting on West Midlands Sheds
Twenty one of the 26 properties being acquired are located in the UK’s West Midlands, including 14 units in the Wellesbourne Distribution Park near Warwick.
The West Midlands “is an important logistics hub supported by large population nodes such as Birmingham, Coventry and Leicester,” observed Ascendas Funds Management’s CEO William Tay in a statement.
The acquisition provides “opportunities for growth underpinned by domestic consumption,” according to an investor presentation. The aggregate gross internal area for the properties is 266,184 square metres, with some 586,850 square metres of site area.
Expanding Beyond Singapore Business Parks
Ascendas REIT’s July acquisition of UK logistics properties – completed on August 16 – increased logistics’ share of the trust’s total assets from 22 percent to 27 percent.
The latest acquisition will increase logistics’ share further, to 30 percent on completion, which is scheduled for the last quarter of this year. UK logistics will double to 8 percent of the portfolio, while Singapore and Australia logistics facilities account for about 11 percent each.
Singapore-based business and science parks will remain the REIT’s largest segment, accounting for 33 percent of total assets, down from 34 percent prior to the acquisition.
The latest acquisition will add GBP 14.3 million to the trust’s net property income (NPI), for an initial NPI yield of 5.33 percent (post-cost), higher than the GBP 11 million NPI and 5.22 percent yield for Ascendas REIT’s July UK acquisition.
Buying a Set of 92% Occupied Sheds
The properties are 92.4 percent occupied, with rental guarantees (for between 3.5 and 17 months) provided by the vendor for the vacant space. The properties are all freehold except for one, which has a 965-year lease. In place leases are triple net, with tenants responsible for all statutory outgoings as well as operations and maintenance expenses. The weighted average lease expiry (WALE) for the assets is 9.1 years for the latest acquisition.
The latest acquisition also adds 19 customers to Ascendas REIT’s client list, more than double the nine acquired in July, with third party logistics, freight forwarding and shipping tenants accounting for 46 percent of the space occupied. Auto repair and servicing firm Aston Martin Lagonda represents the biggest single tenant, accounting for 15 percent of total rental income.
Griffen acquired the Sainsbury’s site for GBP 18.5 million and has now agreed to sell it at a valuation of GBP 27 million.