Ascendas REIT Enters Europe with £207M Purchase of UK Logistics Portfolio

Singapore’s Ascendas REIT is making its first investment in Europe, buying 12 logistics assets in the UK for £207 million ($272 million). The purchase of 2.6 million square feet (241,000 square metres) of prime logistics space adds to more than $6 billion in European warehouse acquisitions by Singaporean investors in the last two years.

“This fits well with Ascendas-Singbridge Group’s plans to widen our international presence,” said He Jihong, Chief Investment Officer of the Ascendas-Singbridge Group.

The SGX-listed trust announced the purchase of the Project Owl portfolio from Oxenwood Catalina via its website on 26 July. It is expected that the deal will be completed in the third quarter of 2018.

Singapore REIT Jumps on UK Logistics Opportunity

Oxenwood Catalina, which was set up as a joint venture between the UK’s Oxenwood and Bermuda-based reinsurer Catalina Holdings in 2014 is selling the portfolio to Ascendas REIT less than three months after putting the set of prime logistics facilities on the market in early May.

“The investment presents an attractive and meaningful entry into the UK market,” said William Tay, executive director and CEO of Ascendas Funds Management, which manages Ascendas REIT. “The portfolio has a long weighted average lease expiry (WALE) of 14.6 years and is largely comprised of freehold land,” he added, also expressing optimism that the acquisition would help boost the REIT’s distribution per unit to its investors.

The original asking price for the assets, which range in size up to 485,000 square feet (45,000 square metres) of gross internal area was said to be £200 million, with Ascendas-Singbridge Group, which controls the manager of Ascendas REIT, having been identified as the likely buyer in early June.

Adding Europe to Singapore and Australia

According to documents submitted to the Singapore exchange, Ascendas REIT sees the purchase as a good first step for expansion into the UK, where demand for logistics assets is seen increasing. Given the fall of the pound, the acquisition is also viewed as a chance to acquire the properties relatively cheaply.

The assets are currently 100 percent occupied and carry a weighted average lease to expiry (WALE) of 14.6 years and the portfolio has a net property income (NPI) yield of 5.32 percent. The sale price is approximately 0.03 percent below a 4 June valuation by Colliers International, according to the announcement.

The S$10 billion REIT, which is affiliated with Temasek Holdings-controlled Ascendas-Singbridge Group, adds the UK assets to its existing investments in Singapore and Australia. In Singapore the listed trust has 100 properties, and is known for its business park holdings. Together with its 31 assets in Australia, the group has 1,320 tenants at its facilities.

Its portfolio runs the full range, from business parks to retail and includes logistics properties.

Singapore Loves European Warehouses

Ascendas REIT’s UK acquisition fits a buying pattern among Singaporean institutions, with investors from the city-state having now purchased nearly $6.1 billion in European logistics assets in less than two years.

In February of this year, Singapore-listed Frasers Property purchased a portfolio of 22 industrial properties in Germany and Austria for $353 million, with that acquisition coming just four months after the firm headed by Thai billionaire Charoen Sirivadhanabhakdi purchased a set of two warehouse facilities in Germany for €42.4 million(then $50.2 million) in October. In July of last year, Frasers bought a majority stake in Germany’s Geneba Properties, which owns auto logistics facilities.

Also in October 2017, Singapore-based Global Logistic Properties expanded into Europe by buying a portfolio of Gazeley-branded logistics facilities from Brookfield for $2.8 billion.

Singapore’s sovereign wealth fund GIC, arguably set the tone for this string of deals in November 2016 when it acquired pan-European warehouse platform P3 Logistic Parks from TPG Real Estate and Ivanhoé Cambridge for €2.4 billion (then $2.6 billion) in November 2016.