SINGAPORE (THE BUSINESS TIMES) – Ascendas Reit has proposed to acquire seven logistics properties located across six industrial submarkets in Chicago, Illinois, for $ 133.2 million.
The proposed deal is expected to increase and diversify the industrial real estate investment trust’s (Reit) exposure to logistics properties in the United States and across its portfolio, its manager said on Tuesday (May 10).
The manager noted that Chicago is a major logistics hub in the US, and it posts strong logistics market fundamentals amid a strong tenant demand and the low availability of space.
The portfolio of properties it is looking to acquire has a total net lettable area of 132,344 square meters, and is 100 per cent occupied by 12 customers with a weighted average lease to expiry of five years as at Mar 31.
The manager noted that the existing customers have occupied their current space for 10.6 years on average, and no single customer contributes to more than 20 percent of the total rental income. The current leases also have built-in rent escalations of between 2 percent and 3 percent per annum.
On a pro forma basis, distribution per unit for its financial year ended Dec 31, 2021, is expected to improve by 0.001 cent or 0.01 per cent, assuming the proposed acquisition was completed on Jan 1, 2021.
The Reit’s pro forma proportion of logistics properties will also rise to 25 percent of its total investment properties, from 24 percent, while its proportion of logistics properties in the US will increase to 14.6 percent from 9.4 percent.
The proposed acquisition will be funded through internal resources and / or existing debt facilities, and is expected to be completed in the second quarter of 2022.
Post acquisition, Ascendas Reit will own 228 properties.
The Reit in October 2021 announced its first entry into the US logistics market when it proposed to acquire 11 logistics properties in Kansas City, US for $ 207.8 million.
Units of Ascendas Reit closed two cents or 0.7 percent lower at $ 2.79 on Monday.