Singapore listed Ascendas REIT is paying $23.5 million on a funds-through basis for a distribution centre in Sydney’s west.
The vendor is Pelligra Group, a diversified developer and investor based in Melbourne.
On 2.7 hectares at 7 Kiora Crescent, the 13,100 sqm facility is due for completion in the second quarter of 2021.
It will be held by Ascendas Longbeach Trust 10, which is indirectly wholly owned by Ascendas REIT.
The buyer said it will incur additional transaction costs of $1.43m – covering stamp duty, advisory and management fees.
However, it added, the purchase price is 19.8 per cent lower than an ‘as if complete’ ($29.3m) valuation, which was carried out in April.
Pelligra Group offered the asset with a 9.5 month rental guarantee.
The deal’s net yield is 6.2pc.
Factoring in its costs, the return for Ascendas REIT drops to 5.8pc.
The purchase is being funded through internal resources and existing debt facilities.
CBRE was the marketing agency.
Its deal comes nine months since Ascendas REIT paid Frasers Property Australia $110.9m, again on a funds-through basis, for an office in Melbourne’s Mulgrave which will be Nissan’s headquarters.
Yennora industrial precinct
Kiora Crescent forms part of a 32ha estate acquired by LOGOS in 2015.
Pelligra’s Larapinta Project Pty Ltd paid $8.83m for Lot 7 in June, 2017. It is expecting to spend about $8.97m constructing the new double storey warehouse (story continues below).
Yennora is about 26 kilometres from the city.
Ascendas REIT chief executive officer and executive director William Tay said “the acquisition of this new prime grade logistics property gives [it] greater exposure to the Sydney market and also enhances the quality of our portfolio”.
“The property is well located in the established inner-western Sydney industrial precinct of Yennora, an area that is enjoying renewed growth given its proximity to central western Sydney and the trend towards last mile logistics.
“The area is well serviced by the Hume Highway to the south and M4 Motorway to the north that links the west, east and south west of Sydney”.
In a press release, the company describes itself as Singapore’s first and largest listed business space and industrial real estate investment trust.
Its property portfolio is valued at $13.2b and includes 197 assets here, and in Singapore, United Kingdom and United States.
A science park, light industrial properties, retail assets and logistics complexes are included.
In Eastern Creek, about 12kms west of Yennora, it holds a 19,918 sqm distribution centre previously tenanted to Officemax, but now for lease via JLL.
“These properties house a tenant base of around 1,490 international and local companies from a wide range of industries and activities, including research and development, life sciences, information technology, engineering, light manufacturing, logistics service providers, electronics, telecommunications, manufacturing services and back-room office support in service industries,” the company said.
“Major tenants include Singtel, DSO National Laboratories, Citibank, DBS, CareFusion, Wesfarmers, Ceva Logistics, JPMorgan and A*STAR Research Entities”.
Ascendas REIT is listed in several indices, it added, including the FTSE Straits Times Index, Morgan Stanley Capital International, Inc (MSCI) Index, European Public Real Estate Association/National Association of Real Estate Investment Trusts (EPRA/NAREIT) Global Real Estate Index and Global Property Research (GPR) Asia 250.
Managed by Ascendas Funds Management (S) Limited, it is a wholly owned subsidiary of CapitaLand Limited – one of the world’s largest real estate investment houses with assets under management estimated at $136.2b.