THE manager of Ascendas Real Estate Investment Trust : A17U 0% (Ascendas Reit) has proposed to acquire a cold storage logistics facility for S$191.9 million, it said on Wednesday (Sep 14).

The property, which is located at 1 Buroh Lane, is the real estate investment trust’s (Reit) first cold storage facility investment in Singapore, said William Tay, chief executive of the manager, in a press statement.

Assuming the proposed transaction was completed on Jan 1, 2021, the manager expects a distribution per unit accretion of 0.56 per cent or an improvement of 0.086 Singapore cent on a pro forma basis.

The 5-storey ramp-up logistics distribution centre was built around 7 years ago. It has a gross floor area of around 59,971 square metres and includes a chiller, freezer, air-conditioned and ambient storage space, as well as ancillary office space. It is within the Jalan Buroh Food Zone where over 30 licensed food establishments reside. 

It is also fully occupied by 5 “well-established” tenants, including a supermarket chain and distributors of fruits and vegetables, the manager noted. Furthermore, it has a weighted average lease expiry of 7 years and built-in rent escalations of 2-3 per cent every 3 years.

For the first year post-acquisition, the manager is estimating a net property income yield of around 7 per cent for pre-transaction costs and 6.9 per cent for post-transaction costs. 

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The S$191.9 million purchase consideration is at a slight discount to the property’s independent market valuation of S$195 million as at May 10. The total cost of acquisition is S$196.2 million, comprising the purchase consideration, a S$1.9 million acquisition fee payable to the manager, and S$2.4 million in other fees and expenses.

The Reit will fund the proposed deal through internal resources and/or existing debt facilities, and expects to complete the transaction in Q4 2022. 

The counter closed flat at S$2.90 on Tuesday.