Here’s why Ascendas REIT had a gloomy December

It’s acquisitions last month weren’t accretive.

While the real estate investment trust (REIT) had a great 2015 for acquisitions, it ended the year on a flat note.

According to Maybank Kim Eng, AREIT last month raised SGD610.5m by issuing 275m new units through a $200.1m placement, a $200.4m preferential offering, and $210m in consideration shares to the vendor to fund the purchases of business park One@Changi City for $438.9m and a logistics facility in Sydney for $82m.

“The NPI yields of One@Changi and the logistics facility are 5.9% and 6.6% respectively, versus the new units issued at a blended yield of 6.8%. As mentioned, by itself, the exercise was not DPU accretive,” Maybank Kim Eng said.

However, Maybank Kim Eng adds that Ascendas REIT’s acquisition for the whole year were generally accretive.

“Sep15’s SGD1.1b acquisition of the Aussie logistics portfolio had a NPI yield of 6%, financed at a blended cost of 4% (60:40 3.5% debt: 4.75% perps). Taking this into consideration with Dec’s acquisitions sees a blended target portfolio NPI of 6% (Aussie logistics and One@Changi), financed at 5% (debt, perps, and new equity),” Maybank Kim Eng said.

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