Ascendas REIT

Ascendas REIT Buying More Office Bldgs In Sydney’s Macquarie Park

AUSTRALIA – Singapore’s Ascendas Real Estate Investment Trust (REIT) intends to acquire a suburban office campus in Sydney’s Macquarie Park, Australia’s biggest metropolitan market, according to a Singapore Exchange (SGX) filing released on Friday morning (11 December).

Situated at 1-5 Thomas Holt Drive, the commercial property consists of 3 adjoining office blocks with a net leasable area (NLA) of 39,188 sq m that are being purchased from AMP Capital for a proposed consideration of S$284.0 million (A$288.9 million), which is also its valuation as of 1 December 2020.

Overall purchase cost is estimated at S$303.3 million (A$308.5 million), including S$19.3 million (A$19.6 million) in acquisition fee, stamp duty, and other transaction costs.

The freehold commercial property has a weighted average lease expiry (WALE) of 4.5 years. While physical occupancy is 93 percent, the occupancy level is considered at 100 percent as the seller is providing a 2-year rental guarantee for the vacant premises. Moreover, the property will benefit from rent escalations of 3.25 percent to 3.75 percent per annum.

Major tenants include Metcash, a leading wholesale distribution and marketing firm with sales of over A$13 billion for financial year 2020. Another is media company Foxtel, whose 65:35 percent owners, US-listed Newscorp and Australian-listed Telstra, have market capitalisations of over US$10 billion and more than A$36 billion respectively.

1-5 Thomas Holt Drive has a net property income for the 1st year of 5.6 percent after taking into account post-transaction costs. The asset is also expected to increase Ascendas REIT’s annual distribution per unit (DPU) by 0.059 cents on a pro forma basis.

In terms of amenities, the office campus comes with a café, a swimming pool, 2 tennis courts, and a BBQ area. It is also just a short walk to Macquarie Park Metro Station. Once the Sydney Metro City Line becomes operational by 2024, commuting time to the city’s central business district (CBD) will be much quicker at 20 minutes.

Moreover, the commercial property has 1,107 parking spaces, one of the highest vehicle parking ratios of 1 space per 35 sq m of NLA for a suburban office property within Macquarie Park.

Interestingly, the 3 office blocks are just 250 metres from MQX4, an office property that is expected to be completed by mid-2022. In September 2020, Ascendas REIT announced that it was purchasing this asset for A$167.2 million.

“We are continuing to expand our suburban office portfolio in Australia as affordable satellite hubs such as Macquarie Park remain attractive for companies seeking to decentralise from the CBD,” said William Tay, CEO and Executive Director of Ascendas REIT’s manager, Ascendas Funds Management (S) Ltd.

“1-5 Thomas Holt Drive is our fifth suburban office property investment in Australia. With this acquisition, Sydney accounts for 48 percent of our Australian portfolio,” he added.
The latest acquisition is expected to be completed by Q1 2021.

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