Ascendas REIT - Despatch of circular in relation to proposed acquisition
- Ascendas REIT (A-REIT) has published its circular in relation to its proposed acquisition of 12, 14 and 16 Science Park Drive from its sponsor and corresponding issuance of new units as partial consideration for the proposed transaction.
- An EGM will be held on 25 Jan 2017 and the target date of completion of the purchase is no later than 31 Mar this year if approval is obtained from its unitholders.
- As a recap, the property is located within Singapore Science Park 1 and is 100% occupied, with DSO National Laboratories and DNV GL Singapore Pte Ltd as the tenants. The total acquisition cost is estimated to be S$437.5m (purchase consideration: S$420m, acquisition fees: S$4.2m, stamp duties and other fees: S$13.3m), of which S$100m is expected to be satisfied by the issuance of consideration units to the vendor.
- Based on A-REIT’s intended method of financing, its pro forma DPU for FY16 would be increased by 2.0% as a result of the proposed acquisition, according to the circular.
- We are positive on this deal as we expect it to be accretive on the DPU level, and had previously raised our FY18 DPU forecast by 1.9% as we had assumed approval will be obtained.
- Reiterate BUY and S$2.72 fair value estimate on A-REIT.