A-Reit to buy 3 properties for $228.5m

Two of them will be funded from recent share placement

ASCENDAS Reit (A-Reit) yesterday announced plans to buy three properties for a total of $228.5 million, to further diversify its portfolio of properties and their tenant-mix.

A-Reit’s manager said that it has signed two separate sales and purchase agreements, and a memorandum of understanding to purchase a property still under development.

Under the first two, A-Reit will acquire two industrial properties for a total of $131 million – the nine-storeyed DBS Asia Hub at Changi Business Park for $116 million, and a multi-storeyed light industrial building at Joo Koon for $15 million.

These acquisitions would have added 0.054 cents to A-Reit’s distribution per unit for the financial year ended March 31, 2009 on a pro-forma basis. They would also raise A-Reit’s assets under management by about 2.8 per cent.

Financing for both will come entirely from 44 per cent of net proceeds from A-Reit’s private placement last August. After these acquisitions, funds from the placement would have been fully utilised, the Reit’s manager said.

The first deal is an interested party transaction, as DBS Asia Hub will be bought from Ascendas (Tuas), a wholly owned subsidiary of A-Reit’s controlling unitholder Ascendas Land Singapore. Subject to JTC’s approval and other conditions, the manager expects this transaction to be completed by April.

DBS currently has a 10 years and one month lease on the property, with annual rental escalation and an option to renew the lease for another three terms of three years each.

Under the second agreement, Flextronics Manufacturing will lease the Joo Koon property for five years with annual rental escalation and an option to renew the lease for another three two-year terms.

The third signing was an MOU to purchase for $97.5 million a Jurong property. This is to be completed in 2011 or 2012 and will only be acquired then.

A-Reit now has total assets of about $4.8 billion in its portfolio of 91 business and science park and industrial properties, as well as logistics and distribution centres. Its unit price gained two cents to close at $1.92 yesterday.

Source : Business Times – 18 Feb 2010