CapitaLand’s Ascendas Real Estate Investment Trust (Ascendas REIT) will acquire a cold storage logistics facility in Singapore from A3 Lux Alpha S.a.r.l for S$191.9 million ($136.6 million), according to an announcement.
Located at 1 Buroh Lane, Singapore, the facility features a combination of chiller, freezer and ambient storage spaces to serve food and beverage storage requirements. As of June 30, 2022, it has been fully occupied by five tenants, including a supermarket chain and distributors of fruit and vegetables.
This will be Ascendas REIT’s first cold storage facility investment in Singapore, said William Tay, executive director and CEO of Ascendas Funds Management, the manager of the REIT. “We are confident to achieve good rental growth due to the limited supply and strong demand for this type of facilities,” he added.
The firm said demand for warehouse space in Singapore will continue to be driven by increasing inventory levels amid supply-chain disruptions, higher freight costs and inflationary pressures. Meanwhile, there is a limited supply of good quality cold storage facilities in the city-state.
On a pro-forma basis, the proportion of logistics properties will rise to 26% of Ascendas REIT’s total investment properties valued at S$16.75 billion.
The estimated net property income yield for the first year post-acquisition is approximately 7% and 6.9% pre-transaction costs and post-transaction costs, respectively.
The transaction is expected to be completed in Q4 2022.
Upon completion of the proposed acquisition, Ascendas REIT will own 230 properties across Singapore, the US, Australia and Europe.
Ascendas REIT invested in assets across three segments, including business space and life sciences; logistics; and industrial and data centres.