Ascendas India Trust buys Hyderabad building for S$92m

ASCENDAS India Trust (a-iTrust) has entered into definitive agreements to acquire aVance 6 from Phoenix Infocity for 5.06 billion rupees (S$92.03 million), said its manager on Tuesday.

This will be the trust's fifth building acquired from Phoenix, which sold the previous buildings to a-iTrust throughout the course of February 2012 to April 2017. About 98.3 per cent of its total floor area of 0.64 million square feet is leased to Amazon.

Based on an independent valuation by Savills Property Services in India, the "open market value" of the building is estimated to be 5.54 billion rupees.

Further, a-iTrust's manager said it has agreed to fund an additional amount of some 1.7 billion rupees for aVance 5 - beyond the building's purchase consideration - by way of non-convertible debentures and inter-corporate deposits.

The lion's share or one billion rupees will be used to pay outstanding dues and for obtaining additional land, while 0.7 billion rupees will be utilised to complete the construction of aVance 5.

According to a-iTrust's manager, aVance 5 has received a letter of intent from a "large multinational corporation (MNC)" to lease the building. It expects this to significantly expedite a-iTrust's acquisition of the building, it added.

aVance 5 was originally due to be ready by the second half of 2019 but remains under construction "due to various reasons including Covid-19 delays", said the manager in its filing. The building is now expected to be ready by the second half of 2021.

"The proposed acquisition (of aVance 6) provides a-iTrust an opportunity to scale up our presence in HITEC City, and will add Amazon as a tenant to our IT park portfolio. The improving connectivity and enhancement work being carried out at aVance, HITEC City, Hyderabad would benefit our tenants in the future," said Sanjeev Dasgupta, chief executive of the manager.

"We have already started seeing some leasing traction, with a large US-based MNC having executed a letter of intent to lease aVance 5," he added.

a-iTrust's latest announcement comes nearly two years after its manager agreed to purchase aVance 5 and 6 from Phoenix, the master developer of the aVance Business Hub in Hyderabad.

Both buildings were meant to be acquired by a-iTrust together with a top-up consideration, based on the leasing level at the time of the acquisition, following the completion of aVance 5. The two buildings have since been demerged by the developer such that they are now held by separate entities, and will have to be purchased independent of each other.

Units of a-iTrust ended Tuesday down 2.6 per cent or S$0.04 at S$1.50 on an ex-distribution basis.

Amendment note: An earlier version of this article's headline suggested that a-iTrust's purchase of aVance 6 marked its fifth building in Hyderabad, when it is in fact the trust's fifth building acquired from Phoenix.