Singapore-listed Ascendas REIT continues to build out its portfolio of industrial properties as the manager of the real estate investment trust announced the acquisition of Cargo Business Park in Brisbane, Australia late last week.
A-REIT has agreed to acquire the 8,216 square metre (88,400 square foot) facility from a subsidiary of Brisbane developer Cavcorp for A$33.5 million ($25 million) according to a statement to the Singapore stock exchange late Thursday.
The deal in the capital of Australia’s Queensland state was announced exactly one week after A-REIT, which is managed by a unit of Singaporean developer Ascendas-Singbridge, announced a $272 million logistics acquisition in the United Kingdom.
Buying a Hybrid Industrial Asset Near the Brisbane Airport
“Cargo Business Park is strategically located near the Brisbane Airport and CBD, William Tay, chief executive officer of Ascendas Funds Management (S) Limited, which manages A-REIT said in a statement. “Its uniqueness allows us to cater to customers who require a combination of warehousing, showroom and office space in the same building.”
A-REIT’s new Brisbane asset consists of a single four-storey building along with a pair of three-storey buildings built some 12 years ago on freehold land at 56 Lavarack Avenue. The property has warehouse and showroom space on the ground floor, with office space on the upper floors.
The property is 87.4 percent occupied, according to A-REIT, and the vendor is said to have agreed to provide a 12-month rental guarantee for the vacant spaces. Current tenants of the industrial facility include the Bureau of Meteorology of the Commonwealth of Australia, ASICS and Nike.
Leases signed by the existing tenants include annual rental escalations of between 3.0 and 4.0 percent, and the weighted average lease expiry is 2.6 years as of 30 June 2018. Net property income yield for the first year is approximately 7.4 percent prior to transaction costs.
In its statement, the REIT manager indicated that the transaction price is in line with an A$33.5 million valuation of the property, dated 30 July 2018, which was performed by Knight Frank. The REIT is expected to incur estimated total transaction costs of A$2.6 million for stamp duty, professional advisory fees, and a one percent acquisition fee payable to the manager.
A-REIT Grabs 34th Aussie Asset
Following the closing of the transaction, Ascendas REIT will have a portfolio of 34 properties in Australia and 99 properties in Singapore comprising its $10.4 billion in assets under management.
In September last year the trust acquired the 100 Wickham Street office tower in suburban Brisbane’s Fortitude Valley for A$83.83 million, and A-REIT returned to the sunny Australian city again in December to purchase 108 Wickham Street, an office tower just a few doors away, for A$106 million.
On July 26th, Ascendas REIT announced its first investment in Europe, buying 12 logistics assets in the UK for £207 million ($272 million).
The trust manager indicated that it expects this latest logistics acquisition in Brisbane to add to A-REIT’s distributions per unit.
The logistics acquisition is among a pair of Singaporean real estate investments announced in Brisbane last week, with Rockworth Capital Partners having announced its A$60 million acquisition of the ING Building at 100 Edward Street on the same day that A-REIT unveiled its industrial deal.