• The US acquisition comprises two office properties – 510 Townsend St and 505 Brannan St, located in the South of Market (SoMa) submarket of San Francisco. The two buildings have a total net lettable area of 41,372 sqm and are fully leased to two high quality technology tenants, Stripe and Pinterest, for a long weighted average lease expiry (WALE) of 9.1 years. The total acquisition cost amounts to US$572.1m (S$784.3m).
• While the acquisition NPI yield is 4.9%, management indicated that these properties are currently under-rented. The acquisition is in line with Ascendas REIT’s growth strategy and increases its exposure to a strategic location in San Francisco while strengthening its US portfolio with newly completed properties with high occupancies.
• Post-acquisition, we expect Ascendas REIT’s AUM to expand to S$13.75bn of which 66% are in Singapore and the remaining 34% overseas.

Acquisitions expected to be DPU accretive

• While not much details have been provided, the potential Europe acquisition will allow Ascendas REIT to gain exposure to a portfolio of large scale European data centres located in Tier 1 data centre hubs across Europe. These properties include a mix of triple net powered shells and operational turnkey data centres.
• In addition, the potential Australia acquisition includes a suburban office property located in a Tier 1 city in Australia.
• Management expects the US, Europe and Australia acquisitions to be DPU accretive. In terms of pro-forma financial impact, according to the management, the US, Europe and Australia purchases could result in a 2-2.5% DPU accretion (+0.85% for the US acquisition only), assuming the acquisitions were completed on 1 Apr 2019.