This article is from the Australian Property Journal archive
SINGAPORE’S Ascendas Reit continues to expand its suburban office portfolio, looking to take advantage of companies decentralising from the CBD, by acquiring an office park from AMP Capital for $288.9 million on a 5.6% yield.
The 1 – 5 Thomas Holt Dr, Macquarie Park property is the trust’s fifth suburban office property investment in Australia and follows the $167.2 million acquisition MQX4, also in Macquarie Park in September this year.
The net yield for the first year is approximately 5.9% pre-transaction costs and 5.6% post costs.
Following the acquisition, Sydney will account for 48% of Ascendas Australian portfolio.
CEO William Tay said, “We are continuing to expand our suburban office portfolio in Australia as affordable satellite hubs such as Macquarie Park remain attractive for companies seeking to decentralise from the central business district,”
The campus style asset comprises three office buildings with a net lettable area (NLA) of 39,188 sqm. 1-5 THD has one of the highest car parking ratios of 1 space per 35 sqm of NLA (total of 1,107 spaces) for a suburban office property within Macquarie Park.
The office blocks underwent substantial refurbishments between 2015 to 2016. Two of the office blocks, 1 and 3 Thomas Holt Drive, have each achieved a 5.0 Star NABERS energy rating. The on-site amenities include a café, two tennis courts, a swimming pool and barbeque areas.
1-5 THD is 100% occupied with a long-weighted average lease to expiry (WALE) of 4.5 years, with built in annual rental escalations of 3.25% to 3.75%. The main tenants are Australian companies Metcash and Foxtel.
Subject to the approval from the Australian Foreign Investment Review Board, the completion of the proposed acquisition is expected to be in 1Q 2021. Upon completion, Ascendas Reit will own 96 properties (S$9.0 billion) in Singapore, 37 properties (S$2.1 billion) in Australia, 30 properties (S$2.1 billion) in the United States and 38 properties (S$0.8 billion) in the United Kingdom.
This transaction comes as institutions ramp up office acquisitions in the lead up to the holiday season following a subdued year. Last week Charter Hall acquired 76-78 Pitt in Sydney for $281.5 million and sold a North Sydney building for $212 million.
So far this month, Lendlease’s APPF acquired 1 Farrer Place for $584.6 million from GPT, which is looking to reposition its portfolio towards industrial and logistics and last month Dexus sold the Harry Seidler-designed Grosvenor Place to China’s sovereign wealth fund for $925 million.
It has been a subdued year for transactions due to the global pandemic. Real Capital Analytics data also shows international travel restrictions have dragged down Australia commercial property activity in Q3 2020.
Sydney industrial and logistics transactions topped a record $US2.2 billion, overtaking Hong Kong to claim the number spot over the first nine months. Although the industrial sector’s strong performance was offset by declines of 70% and greater in the office, retail, and hotel sectors.
However, a CBRE report revealed Australian offices remain the most attractive property asset class. Davidson said more so than ever, offshore investors have a positive view of the Sydney market on a regional and global basis.
