Ascendas REIT's next big buy may be a business park property in Singapore

The Galaxis (One North), The Ascent and 5SPD all present near-term opportunities for A-REIT.

Ascendas REIT’s (A-REIT) next sizable acquisition will likely be in Singapore, with business park properties being their most probable target, reports DBS Group Research.

The Galaxis (One North), The Ascent and 5SPD (both at Science Park 1) all present near-term opportunities for A-REIT to pursue “at an opportune time in the future,” said DBS analyst Derek and Rachel Tan along with DBS’ Singapore research team.

“These potential acquisitions are quality modern specification business parks located within the Science Park and One North precinct – and we believe that investors will warm up to them if acquired by A-REIT,” the analysts noted.

A-REIT is noted to have more than $1b worth of properties generating stable cash flows and may be injected over time. The REIT is expected to deepen its exposure within its markets of US, UK, Australia, and Singapore.

The company recently completed the acquisition of $1.8b worth of properties from its sponsor CapitaLand, which propelled the group to become the largest S-REIT in Singapore with an asset base of over $12.8b. The deal also brought A-REIT’s total acquisition to over $3n in the past two years.

The proposed acquisition comprised of 28 office parks located in the US and two business parks properties in Singapore worth more than $1.28t and $380m, respectively. The combined initial yield (pre-cost) basis for the portfolio is 6.5% with the US portfolio acquired at a c.6.4% yield whilst the Singapore properties are acquired at 6.7%.

In particular, the acquisitions of Necleos and FM Global Centre anchored the REIT’s dominance in the business and science park market in the island, according to DBS analysts.

“Newly completed and located within these hubs and with long land lease tenures of 52 years and 73 years respectively, they improve the REIT’s Singapore core. With this acquisition, the Singapore industrial property portfolio will have 45% of its asset value in the Business & Science Park space,” the analysts added.