What to expect from Ascendas’ acquisitions of 3 science parks

OCBC Investment Research cites three main reasons why the acquisitions are yield accretive.

Ascendas REIT (A-REIT) yesterday, Feb. 6, proposed to acquire three properties (Cintech I, Cintech II, Cintech III and Cintech IV) at Science Park Drive from Ascendas Land for a purchase consideration of S$183.0m.

According to management guidance, the properties are expected to generate an NPI yield of 7.3% and add another 0.16 S cent to DPU (assuming 50% of the purchase consideration is satisfied by new unit issue).

In a research note, OCBC said that it is positive on this development for three main reasons: (1) the acquisitions are expected to be yield accretive; 2) further strengthen A-REIT’s presence in the Science Park segment; and 3) provide further income diversification.

“Occupancy rates for the properties, we note, are also healthy at 90.9-100%,” said OCBC analyst Kevin Tan.

A-REIT proposed to fulfill the acquisitions by making partial payment via issue of new units to Ascendas Land amounting to not more than 50% of the purchase price, or S$91.5m.

As the investment and unit issue constitute an interested party transaction and a placementto a substantial unitholder respectively, unitholders’ approval had to be obtained at the EGM to be convened in due course.