A-Reit to add Sydney logistics property to its portfolio

THE manager of Ascendas Real Estate Investment Trust (A-Reit) on Wednesday announced an agreement to buy a new logistics property in Sydney, Australia, for A$23.5 million (S$21.1 million). The acquisition will be accretive to A-Reit's distribution per unit.

A-Reit has purchased a 26,632 sq m piece of freehold land in the Yennora suburb of Sydney, an industrial precinct, from an entity called Larapinta Project. Larapinta will also develop the property, which is expected to be completed in the second quarter of 2021.

A-Reit announced that the purchase consideration - which includes both the land and development cost - is 19.8 per cent below what it would have cost it to buy a similar completed property.

On top of the purchase price, A-Reit will incur transaction costs of A$1.4 million for fees and duties.

The net property income yield for the first year is estimated to be 5.8 per cent after taking into account the transaction costs. This yield factors in a rental guarantee of 9.5 months from Larapinta Project.

William Tay, executive director and chief executive of A-Reit's manager, said Sydney continues to be the "strongest industrial market" in Australia, with "robust tenant demand and sustained levels of investor interest".

The property, which lies 26 km west of Sydney's central business district, will have 13,100 sq m of lettable floor area.

Larapinta Project is listed as an associated entity of Trinity Development Group in the 2009-2010 annual report of Trinity Group. At the time, Trinity Group was an ASX-listed Australian property business with interests in Trinity Development Group.

A spokesperson from the manager of A-Reit desribed Larapinta Project as a "local private developer" in response to a query from The Business Times.