ARA Logos to buy Australia properties, invest in sponsor’s funds

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ARA LOGOS Logistics Trust (ALog) plans to fork out S$404.4 million to buy five properties in Australia from ventures managed by its sponsor, Logos Property Group, as well as invest in two of the sponsor’s funds.

This will be ALog’s first acquisition since its rebranding in April this year, the real estate investment trust’s (Reit) manager said on Monday. The Reit was previously known as Cache Logistics Trust.

The purchase price for the five logistics properties in Brisbane, including an asset under development, is about S$225.9 million. The development asset is a cold storage facility with the initial practical completion of its construction expected to be in November 2021.

ALog also plans to take a 49.5 per cent stake in New LAIVS Trust and a 40 per cent interest in Oxford Property Fund for a total of S$178.5 million. These two funds have a combined portfolio of five logistics properties in New South Wales and Victoria, Australia.

With the proposed acquisitions and fund investments, ALog’s deposited property value will increase by 28.2 per cent to S$1.7 billion on a pro forma basis as at June 30, from about S$1.3 billion. The portfolio value attributable to Australia is also expected to rise in tandem to 47.6 per cent, from 32.5 per cent.

Meanwhile, ALog’s enlarged portfolio’s weighted average lease expiry by net lettable area will improve to 4.6 years from 2.8 years, the manager said.

The blended net property income (NPI) yield is about 5 per cent, for the portfolio of the new Australia properties and fund properties.

The Reit manager intends to undertake an equity fundraising and use external bank borrowings to fund the total acquisition.

The equity fundraising will also include a private placement of new ALog units to institutional and other investors, as well as a non-renounceable preferential offering to unitholders on a pro rata basis.

The Reit manager said the new property and fund portfolio sit in the hearts of industrial hubs across the eastern seaboard cities of Brisbane, Sydney and Melbourne.

As at June 30, the new portfolio is about 97 per cent occupied, and tenants include ACFS Port Logistics and Agility Logistics.

Separately, it has declared a distribution per unit (DPU) of 1.461 Singapore cents for its third quarter ended Sept 30, 2020, up from 1.313 Singapore cents a year ago.

The total amount distributable to unitholders grew 12.3 per cent to S$16.0 million; its NPI increased by 8.3 per cent to 22.9 million.

The Reit manager has also released another S$1.0 million out of the remaining S$2.0 million retained distributable income to its unitholders, it said.

This comes as gross revenue went up 6.5 per cent to S$29.5 million, mostly driven by higher revenue contribution and commencement of new leases at several properties during the quarter.

Karen Lee, chief executive officer of the manager, said that ALog’s logistics portfolio has continued to deliver a “robust performance” for the quarter despite challenging operating climates during Covid-19.

“Supported by a resilient logistics sector and the strong demand for modern logistics warehouses, ALog’s quality portfolio is well-positioned to tap on these growth drivers to continue to deliver higher organic growth and stable performance for unitholders,” she said.

Ms Lee added that the new properties are set to provide further income and geographic diversification within Australia, “which has stable fundamentals and strong growth potential”.

ALog will have a pre-emptive right over the balance 50.5 per cent stake in New LAIVS Trust and the remaining 60 per cent interest in Oxford Property Fund. This offers visibility of a future growth pipeline, the Reit manager said.

As the proposed acquisitions and fund investments will constitute an interested-party transaction, they will be subject to ALog unitholders’ approval at an extraordinary general meeting to be convened.

ALog units closed at S$0.61 on Monday, down S$0.02 or 3.18 per cent.