Ascendas REIT to acquire The Galen at S$126m

Here's how it plans to boost Singapore's science park segment.

According to OCBC Investment Research, Ascendas REIT (A-REIT) yesterday announced the proposed acquisition of The Galen at 61 Science Park Road from Singapore Science Park Ltd, a wholly-owned subsidiary of Ascendas Land (S) Pte Ltd. 

OCBC adds that the purchase consideration was S$126.0m, representing a marginal discount to the independent valuations of S$126.8mS$127.0m by JLL and CBRE. 

Here's more:

Details of transaction. The Galen is a six-storey multi-tenanted science park building located within Singapore Science Park II and has a NLA of 234,384 sqft. It is currently 97.5% occupied, with Ascendas Land and the REIT manager taking up c. 22.5% of the lease space.

The property, we note, was first mentioned as a potential acquisition asset when it raised S$406.4m through a private placement of 160m new units on 8 Mar. 

According to A-REIT, the asset is expected to generate a NPI yield of 6.8% and add 0.052 S cents to its DPU on an annualised basis, assuming the acquisition is fully funded using the placement proceeds. 

This is in line with our initial assumptions made on the transaction.

Stronger footprint in Science Park segment. A-REIT expects the property to complement and strengthen its foothold in the science park segment in Singapore, and in turn allow A-REIT to enjoy enhanced operational efficiency and economies of scale.

Upon completion of the acquisition (expected by end-Mar), we understand that a land lease of 66-year tenure will be granted to AREIT. As mentioned in our 11 Mar report, the upfront land premium is not applicable as the annual land rent payable has been waived by the Singapore government.