AIMS APAC REIT has entered a deal to acquire the Woolworths Headquarters, located in New South Wales, Australia, for A$463.25 million, or around S$454 million, from Inmark Asset Management, the Singapore-listed REIT said in a filing to SGX Thursday.
“This is a transformational acquisition for AA REIT, representing the largest asset in the REIT’s high-quality portfolio, and wholly-leased to one of Australia’s largest companies listed on Australian Securities Exchange,” George Wang, chairman of the REIT’s manager, AIMS APAC REIT Management, said in the statement.
The deal will increase AA REIT’s portfolio value by more than 26.6 percent to S$2.183 billion, and boost the Australian properties’ contribution to the portfolio, the filing said.
AA REIT said the deal will be financed with a competitive local debt financing package for 60 percent of the consideration, and net proceeds raised from the recent issuance of S$250 million in perpetual securities. In addition, the issuance of new equity may be considered, the filing said.
Wang noted the asset is located in Sydney’s resilient business park market, at the Norwest Business Park, in a precinct housing established domestic and multinational companies, including Australia Post, IBM, Optus and data centers for the Reserve Bank of Australia.
The property, fully leased to Woolworths Group, will have an initial net property income yield of 5.17 percent, and will be accretive to distribution per unit (DPU), the filing said.
On a pro forma basis, if the acquisition had been completed on 1 April 2020, the DPU would have been 9.37 Singapore cents for the fiscal year ended 31 March 2021, compared with 8.95 Singapore cents without the deal, AA REIT estimated.
The 10-year balance of the lease with Woolworths has built-in rental escalation of 2.75 percent a year, the filing said.
The property, which currently has three inter-connecting buildings with office space, a data center operation and amenities, sits on nine hectares of freehold land and includes a new multi-storey carpark with capacity of more than 1,000 parking bays, and new rooftop solar panels, AA REIT said, adding the site will allow for expansion with additional buildings.
After the deal’s completion, AA REIT’s portfolio will hold 29 properties, including 26 in Singapore, one in Gold Coast, Australia, one in Bella Vista, Australia, and a 49 percent interest in a Macquarie Park property.