Sime Darby Business Centre SOLD to Aims Apac Reit for S$106.6m

Sime Darby Business Centre SOLD to Aims Apac Reit for S$106.6 Million

Aims Apac Reit would soon be acquiring Sime Darby Business Centre for a sum of S$106.6 million.

The upscale showroom cum business-space precinct is located along Alexandra Road. As per the announcement the total cost of the acquisition is inclusive of the S$4.6 million cost of transaction.

Reit in a recent filing with the stock exchange has announced that HSBC Institutional Trust Services (Singapore) Limited, its trustee has signed a put and call option agreement with Aster (Alexandra) Pte Ltd for this property.

Malaysia based Sime Darby Property Berhad’s wholly-owned subsidiary Sime Darby Property Singapore Limited currently anchors this property.

Categorized as light industrial facility, this property has a total land area of 7,720 sq m and 16,647 sq m Gross Floor Area. 34.2 years balance remains on its lease as per December 2020.

As per the filing, this commercial property would be acquired under a limited leaseback arrangement where Sime Darby Property Singapore Limited shall lease back 70% of the GFA.

This will last for a period of 10 years from the date of the acquisition. A 2.25% annual rental escalation has been fixed along with a 4-year lease-renewal option based on the prevailing rate in the market.

Sime Darby Business Centre – A Great Asset

In an official announcement, Aims Apac Reit stated that this is the first acquisition for the group in the city fringe and the location is well connected to the Central Business District.

There are currently nine existing tenants in the building holding lease agreements and these include businesses in Consumer Products, Information Technology, Medical, Food and Beverages and Business Services.

Under the current market rate the property would yield 5.9% in initial net property income (NPI) and is DPU (Distribution Per Unit) accretive.

As per the pro forma funding structure this acquisition would translate to an addition of 0.48 Singapore cents for Fy2020 DPU to the existing 9.5 Singapore cents taking it to 9.98 Singapore cents.

Once this acquisition is completed light industrial exposure of Apac Reit would increase to 15.8% from the current 11.7%.

Its portfolio occupancy would marginally change from the existing 95% to 94.5%. WALE (weighted average lease expiry) for Reit’s portfolio would also extend from the current 4.23 years to 4.52 years.

As per information available currently Apac Reit would be funding this acquisition through debt and they would utilize existing debt facilities and also take new term loan.

Apac Reit’s aggregate leverage after this acquisition would go up to 39% which is well within the 50% requirement as per Monetary Authority of Singapore’s guideline.

Aims Apac Reit Strengthening Its Portfolio

Reit will now have 29 properties after this acquisition including two properties in Australia and remaining ones in Singapore.

Aims Apac Reit’s Chief Executive Mr Koh Wee Lih said that this is a strategic acquisition for Reit and with this the company has reaffirmed its commitment toward yield-accretive opportunities in the light industrial and industrial segments that also includes warehouses and logistics facilities.

According this acquisition fits into the company’s long-term goals of strengthening its portfolio and they will continue to look at fresh investment opportunities that enhance their assets.

This he said was on line with regular distribution of benefits to the unit holders and achieving long-term growth.

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