Ascendas REIT - OCBC Investment 2016-09-13: Acquisition of two Australian properties for A$168.2m

ASCENDAS REAL ESTATE INV TRUST A17U.SI

Ascendas REIT - Acquisition of two Australian properties for A$168.2m

  • Ascendas REIT (A-REIT) announced its proposal to acquire two properties in Australia. 
  • The first is a business park property in Sydney, for a purchase consideration of A$143.4m (~S$145.6m), from Frasers Property Australia.
  • The second is a forward purchase of a logistics property, Stage 4, Power Park Estate, located in Dandenong South, Melbourne for a purchase consideration of A$24.8m (~S$25.2m). Construction of this property is estimated to complete in 1Q17. 
  • Total transaction costs of A$10.8m are expected to be incurred. 
  • These acquisitions do not come as a surprise to us, as A-REIT had previously announced that it was conducting due diligence on two potential acquisitions in Australia when it carried out a private placement exercise in early August.
  • Consequently, S$112.1m, or ~72.4% of the gross proceeds raised will be used to partially fund the acquisitions. The initial NPI yields (pre-transaction costs) for the Sydney and Melbourne properties are 6.9% and 6.7%, respectively, while both assets’ NPI yield post transaction costs is estimated at 6.5%. 
  • Maintain BUY and S$2.66 fair value on A-REIT.




Wong Teck Ching Andy CFA OCBC Investment | http://www.ocbcresearch.com/ 2016-09-13
OCBC Investment SGX Stock Analyst Report BUY Maintain BUY 2.66 Same 2.660

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