Ascendas REIT acquires Australia office building under construction for A$111 million

An artist's impression of the office building to be constructed at 254 Wellington Road in Melbourne, Australia. The property was acquired by Ascendas REIT. Credit: CapitaLandAn artist's impression of the office building to be constructed at 254 Wellington Road in Melbourne, Australia. The property was acquired by Ascendas REIT. Credit: CapitaLand

Ascendas REIT has acquired an office building to be built in suburban Melbourne, Australia, for A$110.9 million, or around S$104.4 million from ESR FPA (Wellington Road), the REIT said in a filing to SGX Thursday.

“This will be our fourth suburban office property in Australia. We are very pleased with this acquisition as it is well-located in the Monash Technology Precinct in Melbourne, has 65 percent of the space pre-committed for 10 years and is distribution-per-unit (DPU) accretive,” William Tay, executive director and CEO of the REIT’s manager, said in the statement.

The net property income yield for the first year is expected to be around 5.7 percent, post transaction costs, the REIT said.

On a pro forma basis, assuming the acquisition was completed on 1 April 2018 and the property was operated for the full financial year, the DPU for the period would have improved by 0.014 Singapore cent, the REIT estimated.

The property is expected to generally be completed in the second quarter of 2020, with tenant Nissan Motor (Australia) to then begin a 10-year lease for 65.2 percent of the space, with a 3.0 percent annual rental escalation, Ascendas REIT said. Nissan will use the property as its new national head office and training center, with an emphasis on electric vehicles, the filing said.

ESR FPA (Wellington Road) will also provide a three-year rental guarantee for any remaining vacant space, the REIT said.

Ascendas REIT said the deal will be funded with internal resources and/or existing debt facilities.

The property, located at 254 Wellington Road in Melbourne, will have an eight-level corporate office, a workshop, a cafe, end-of-trip facilities and a multi-level car park for 911 vehicles, the REIT said.

Including the newly acquired property, Ascendas REIT will have 97 properties in Singapore, 36 in Australia and 38 in the U.K.

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