S-REIT acquisitions have started to pick up in the year to date despite rising rates, with over 18 deals announced exceeding S$4 billion in total purchase consideration. A number of acquisitions announced were in sectors such as industrial/logistics, office properties, data centres, and hospitality sectors.

Cromwell European Reit (CEReit) : CWBU 0% in July announced the proposed acquisition of its third logistics asset in the United Kingdom. The freehold logistics property is situated within the Whitehouse Industrial Estate in Preston Brook, south-east of Runcorn, and well-positioned in a distribution location for UK logistics and industrial occupiers including neighbouring operations such as Diageo, YKK, DHL and Phoenix medical supplies. The property is fully occupied on a 10-year triple net lease and the tenancy includes a retail price index-linked rent review at year 5 subject to terms.

CEReit notes that the UK’s logistics sector’s Q1 2022 vacancy is at 3.1 per cent and average rents continued to grow 11.4 per cent in the year-to-March 2022. In terms of industrial investment values, Q1 2022 was at £3.3 billion (S$5.4 billion) and is the second highest first quarter on record just after Q1 2021’s £3.7 billion. CEReit’s portfolio currently has 44 per cent exposure to light industrial/logistics, advancing its strategy of pivoting towards this sector.

Ascendas India Trust : CY6U 0% also announced in July that it is investing in 2 industrial facilities, part of Casa Grande Phase 2, at Mahindra World City in Chennai. This acquisition is in addition to the earlier forward purchase transaction of an industrial facility, Casa Grande Phase 1, which was completed in May 2022. The trust will fund the development of the Phase 2 project, and upon completion and meeting key conditions, will acquire the entity developing the project.

Ascendas India Trust believes that the acquisition will improve earnings and distributions for unitholders with the pro forma impact on FY21 distribution per unit (DPU) expected to be an additional 0.01 Singapore cent.

In the August month-to-date, Ascendas Reit and Ascott Residence Trust both announced proposed acquisitions.

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Ascendas Reit : A17U 0% announced that it will be acquiring the Philips Apac Center in Singapore from Philips Electronics which will enter a multi-year leaseback of more than two-thirds of the existing space to become the anchor tenant. The property is leased to a total of 4 tenants and has an occupancy rate of 95.7 per cent and a long weighted average lease to expiry of 4.5 years.

The pro forma impact on the DPU for the financial year ending Dec 31, 2021 is expected to be an accretive 0.045 Singapore cent assuming the proposed acquisition was completed on Jan 1, 2021.

Ascott Residence Trust (ART) : HMN 0% announced the proposed acquisition of 9 properties from its sponsor, The Ascott, which includes serviced residences, rental housing and student accommodation across Australia, Japan, Vietnam, France and the United States. The acquisition is expected to grow the trust’s pro forma FY21 distribution per stapled security by 2.8 per cent and its total assets to S$8.3 billion. To fund the acquisition, ART launched a private placement last week raising S$170 million.

ART notes that the addition of the 5 rental housing properties in Japan and a student accommodation in the US will increase its longer-stay portfolio proportion from 17 per cent to 19 per cent, bringing it closer to its target of 25 per cent to 30 per cent. Three of the assets to be acquired are expected to be certified green by 2023, bringing its proportion of green properties to 38 per cent, in line with its target to reach 50 per cent of its portfolio by 2025. SGX RESEARCH

The writer is a research analyst at SGX. For more research and information on Singapore’s Reit sector, visit sgx.com/research-education/sectors for the monthly S-Reits & Property Trusts Chartbook.

Source: SGX Research S-Reits & Property Trusts Chartbook.