ARA Logos to buy Australia properties and invest in sponsor's funds for S$404.4m

ARA LOGOS Logistics Trust (ALog) has proposed to fork out S$404.4 million in total, to buy five properties in Australia from ventures managed by its sponsor, Logos Property Group, as well as invest in two of the sponsor's funds.

This will be ALog's first acquisition since its rebranding in April this year, the real estate investment trust's (Reit) manager said on Monday. The Reit was previously known as Cache Logistics Trust.

The purchase price for the five logistics properties in Brisbane, including an asset under development, is about S$225.9 million. The development asset is a cold storage facility with the initial practical completion of its construction expected to be in November 2021.

ALog also plans to take a 49.5 per cent stake in New LAIVS Trust and a 40 per cent interest in Oxford Property Fund for a total of S$178.5 million. These two funds have a combined portfolio of five logistics properties in New South Wales and Victoria, Australia.

With the proposed acquisitions and fund investments, ALog's deposited property value will increase by 28.2 per cent to S$1.7 billion on a pro forma basis as at June 30, from about S$1.3 billion. The portfolio value attributable to Australia is also expected to rise in tandem to 47.6 per cent, from 32.5 per cent.

Meanwhile, ALog's enlarged portfolio's weighted average lease expiry by net lettable area will improve to 4.6 years, from 2.8 years, the manager said.

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The blended net property income (NPI) yield is about 5 per cent, for the portfolio of the new Australia properties and fund properties.

The Reit manager intends to undertake an equity fundraising and use external bank borrowings to fund the total acquisition outlay.

Under the equity fundraising, ALog's sponsor Logos as well as Ivanhoé Cambridge China will subscribe for new units in the Reit. Ivanhoé Cambridge China is wholly owned by Ivanhoé Cambridge, the real estate arm of Canadian institutional fund manager Caisse de dépôt et placement du Québec.

The equity fundraising will also include a private placement of new ALog units to institutional and other investors, as well as a non-renounceable preferential offering to unitholders on a pro rata basis.

The Reit manager said the new property and fund portfolio is made up of "high-quality and prime logistics properties" located on freehold land or long-dated ground leases.

They sit in the hearts of industrial hubs across the eastern seaboard cities of Brisbane, Sydney and Melbourne.

As at June 30, the new portfolio is about 97 per cent occupied, and the tenants include ACFS Port Logistics and Agility Logistics.

Karen Lee, chief executive officer of the manager, said the proposed deals will expand the Reit's footprint across key economic hubs in the East Coast of Australia, and pave the way for the ALog's next chapter of growth under Logos' sponsorship.

She added that the new properties are set to provide further income and geographic diversification within Australia, "which has stable fundamentals and strong growth potential".

ALog will have a pre-emptive right over the balance 50.5 per cent stake in New LAIVS Trust and the remaining 60 per cent interest in Oxford Property Fund. This offers visibility of a future growth pipeline, the Reit manager said.

As the proposed acquisitions and fund investments will constitute an interested-party transaction, they will be subject to ALog unitholders' approval at an extraordinary general meeting to be convened.

ALog units were trading flat at S$0.63 as at 11.22am on Monday.