Ascendas Real Estate Investment Trust has agreed to acquire the remaining 75% equity stake in Galaxis business park in Singapore for S$534.4 million (US$400 million). The total cost is S$543.8 million, including the acquisition fee of S$5.4 million and S$4 million in stamp duty, other fees and expenses.
Following the acquisition of an initial 25% interest in March 2020, the proposed acquisition will give Ascendas Reit full control of the property. The deal will enlarge its business and science park portfolio in Singapore by 17.6% to S$4.87 billion. Total net lettable area (NLA) will increase by 8.8% to 750,915 square metres.
Completed in 2015, Galaxis is located in the heart of one-north, a vibrant business park which houses key growth sectors such as biomedical sciences, information and communications technologies and media, science and research institutes, as well as startups. The area has a plethora of food & beverage options and amenities such as hotels, supermarkets, clinics, gyms and childcare facilities.
Including Galaxis, Ascendas Reit is expected to own five properties with a total NLA of 188,225 sq m within one-north by the end of 2021. This includes Grab’s headquarters which is under development and expected to complete this year.
The property has a remaining land lease tenure of about 51 years, compared with the government’s current practice of releasing shorter-tenure land plots of 20 to 30 years.
Galaxis enjoys a high occupancy rate of 98.6% as of March 31 2021. Ascendas Reit will benefit from the addition of renowned tenants such as Sea (formerly Garena), Canon and Oracle, which is expected to result in higher rental contributions from information and communications technologies and electronics customers.
The net property income yield for the first year is approximately 5.4% and 5.3% pre-transaction costs and post-transaction costs respectively.
The agreed property value on a 100% basis of S$720 million is about 2% lower than the average of two independent market valuations of the property of S$735.0 million as of April 30 2021. Ascendas Fund Management, the reit manager, intends to finance the total acquisition cost (less the acquisition fee) through a combination of debt financing, the issue of consideration units to the vendor and its nominees, and the proceeds of an equity fund raising.
Ascendas Reit’s investment properties under management stood at S$15.1 billion as of March 31 2021. Its portfolio comprises 212 properties across Singapore, Australia, the United States and the United Kingdom/Europe.