Ascendas REIT seals $110m deal with Jurong Town Corporation

The news: Ascendas REIT (A-REIT) has been awarded the business park site at Fusionopolis for S$110m by Jurong Town Corporation (JTC). Completion of the business park is expected in 3QFY14. The site will be a modern suburban business facility of 25k sqm GFA, comprising 60% business park space and 40% office space to cater to prospective tenants from IT and Media industries.

Our thoughts: We view A-REIT’s latest award positively as this will strengthen A-REIT’s leadership position in the Business & Science Parks segment. In addition, we believe the close proximity of the business park site at Fusionopolis with other A-REIT’s properties within the one-north region and Science Parks I & II will allow A-REIT to reap cost synergies. However, given the lack of immediate catalysts in the
next 12 months, we believe A-REIT is currently fairly valued. Maintain NEUTRAL on A-REIT with unchanged TP of S$2.00.