Ascendas Reit to purchase suburban office building in Sydney for A$167.2m

ASCENDAS Reit's manager announced on Friday after trading hours that it is acquiring a suburban office building to be developed at 1 Giffnock Avenue, Macquarie Park, in Sydney, Australia, for A$167.2 million (S$161 million) from Frasers Property Industrial and Winten Property Group.

Frasers Property Industrial and Winten Property Group will design and build the development, which is Ascendas Reit's fifth suburban office asset in Australia.

The building, also known as MQX4, sits on freehold land of 3,308 sq m. On completion, it will comprise a total net lettable area of 19,384 sq m made up of office (17,753 sq m) and retail (1,631 sq m) space. It is designed as a nine-storey building comprising eight levels of office space, ground floor retail and 204 car spaces.

MQX4 is located within 100 m to the Macquarie Park Metro station. The opening of the Sydney Metro City Line in 2024 will further reduce travel time to the central business district to 20 minutes.

Macquarie Park is a well-established business precinct with about 860,000 sq m of commercial office accommodation, occupied by national and international corporate headquarters across the pharmaceutical, technology, electronics and telecommunications industries.

On the proposed acquisition, net property income yield for the first year is approximately 6.1 per cent post-transaction costs. The pro forma impact on distribution per unit (DPU) for the 12 months ended Dec 31, 2019 would be an estimated improvement of 0.046 Singapore cents, assuming that MQX4 was acquired and completed on Jan 1, 2019.

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The completion of the land sale is expected to occur in Q4 2020, and MQX4 is expected to be completed around mid-2022.

The developers will provide a three-year rental guarantee from completion of the property for any vacant spaces. The proposed acquisition will be funded by Ascendas Reit through internal resources and existing debt facilities.

As at June 30, 2020, Ascendas Reit's investment properties under management stands at S$12.75 billion, comprising 197 properties across Singapore, Australia, UK and the US. Ascendas Reit's portfolio includes business and science parks, suburban office properties, high-specifications industrial properties, light industrial properties, logistics and distribution centres, and integrated developments, amenities and retail properties.

Units of Ascendas Reit closed flat at S$3.28 on Friday, prior to the announcement.