Ascendas REIT: To acquire another 26 UK logistics properties for S$459.2 million

Correction: This article has been updated to state that Colliers International Valuation UK had valued the properties at 257.48 million British pounds.

Ascendas REIT plans to acquire another 26 logistics properties in the U.K. for 257.5 million British pounds, or around S$459.2 million, from Griffen Group UK Holding, the REIT manager said on Saturday.

The proposed acquisition is expected to generate a net property yield of around 5.54 percent before transaction costs and 5.39 percent post-transaction costs, it said in the filing to SGX on Saturday.

“This acquisition fits strategically with our current U.K. portfolio. The additional 26 logistics properties will increase our presence in the West Midlands, which is an important logistics hub supported by large population nodes such as Birmingham, Coventry and Leicester,” William Tay, executive director and CEO of Ascendas Funds Management (S), which is the REIT’s manager, said in the statement.

Tay said the deal would broaden its customer base to include Aston Martin Lagonda, Royal Mail Group and Sainsbury’s Supermarkets.

In its rationale for the acquisition, the REIT said that the U.K.’s logistics property market was expected to see sustained rental growth amid strong demand and constrained supply, with a the shift toward online retail sales offering a key demand driver.

Acquisition funding

The acquisition is expected to be funded with a combination of pound-sterling-denominated debt and the proceeds of the private placement which closed earlier in September, it said.

The 26 properties have a total gross internal area of 266,184 square meters, it said.

The target portfolio is 100 percent occupied, or 92.4 percent physically occupied if excluding rental guarantees, and has a weighted average lease expiry, or WALE, of 9.1 years, it said.

The valuation of the properties, which was carried out by Colliers International Valuation UK, was at 257.48 million British pounds, or S$463.80 million, as of 14 August, it said.

The pro forma distribution per unit accretion of the acquisition was estimated at 0.0223 Singapore cent, it said.

The REIT, via Ascendas REIT (Europe), will acquire all of the issued share capital of Griffin UK Logistics Fund and its nine wholly owned subsidiaries which own the portfolio of properties, it said in the filing to SGX. The deal is expected to be completed in the fourth quarter of this year, it said.

After the proposed acquisition’s completion, Ascendas REIT will own 98 properties in Singapore, 35 in Australia and 38 in the U.K., it said, adding the U.K. properties will make up 8 percent of the REIT’s total portfolio asset value, up from 4 percent previously.

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