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A-Reit buying A$76.6m logistics property

Acquisition expected to generate net property income yield in the first year of 6.6% post-transaction costs

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FULLY OCCUPIED: The proposed acquisition of the Sydney property at 6-20 Clunies Ross Street, Pemulwuy, will be Ascendas Reit's 10th logistics facility in Sydney and 27th in Australia.

Singapore

ASCENDAS Reit (A-Reit) plans to buy a logistics property in Sydney, Australia, for A$76.6 million (S$76.6 million) from Deka Australia One.

Its shares rose three cents on Thursday to finish at S$2.28 on the news.

The proposed acquisition of the property at 6-20 Clunies Ross Street, Pemulwuy - a modern 36,220 square metre high clearance warehouse and a 2,359 sq m free-standing two-storey office/laboratory facility - will be the trust's 10th logistics facility in Sydney and 27th in Australia.

"It is another premium quality property with characteristics similar to our earlier acquisitions in Australia, such as freehold land, long weighted average lease expiry of 6.1 years and triple net leases," said Tan Ser Ping, executive director and chief executive officer of the trust's manager.

It is also fully occupied, and has a built-in step-up rental escalation of between 3.5 per cent and 4 per cent per annum in the leases.

Current tenants in the property are government-related entities, Australia Post and New South Wales Police. Australia Post has subleased its space to a well-known Australian retailer, Target, which uses it as its major distribution facility.

The acquisition is expected to generate a net property income yield of about 7.1 per cent pre-transaction costs (6.6 per cent post transaction costs) in the first year. The annualised pro forma financial effect on distribution per unit would be 0.007 Singapore cents.

The acquisition is expected to be completed in the first quarter of 2016, subject to receipt of Australian Foreign Investment Review Board clearance.

On completion, A-Reit will own a total of 102 properties in Singapore, 27 properties in Australia and two business park properties in China.

In this quarter, the trust has announced acquisitions of properties totalling S$1.6 billion in Australia and Singapore.