A-Reit Buys Acer Building For $75m

Source : The Business Times, January 29, 2008

It also bags warehouse in CBP, announces completion of HansaPoint

ASCENDAS Real Estate Investment Trust (A-Reit) has bought the Acer Building at International Business Park in Jurong East for $75 million or $344 per square foot of lettable area.

Market sources say the price reflects an initial yield of 6.5-6.8 per cent.

A-Reit yesterday also announced the purchase of Sim Siang Choon Building, on the fringe of Changi Business Park (CBP), from Sim Siang Choon Hardware for $31.89 million.

This is a four-storey warehouse with a first-storey showroom and a separate single-storey warehouse.

In addition, A-Reit said HansaPoint@CBP received a Temporary Occupation Permit on Jan 22 and has achieved full occupancy.

The $28.6 million project's major tenants include Rohde & Schwarz Systems & Communications Asia, Credit Suisse and Citco Fund Services (Singapore).

The completion of HansaPoint@CBP and acquisition of the Acer and Sim Siang Choon buildings will have a positive effect on A-Reit's distribution per unit (DPU).

A-Reit is buying Acer Building from Acer Computer International.

The deal involves Acer's local subsidiaries Acer Computer (Singapore) and Logistron Services leasing back 23 per cent of the current net lettable area for five years with an option to renew for a further 3+2 years.

The building's current occupancy is 97 per cent.

Acer Building's sale was handled by DTZ through an expression of interest exercise that drew five offers.

The other bidders are believed to have been two other Singapore Reits, Frasers Centrepoint and a private fund managed by Mapletree.

The property, a high- tech business park development, was completed in May 1996 on a site leased from JTC Corp for 30 years with an option to renew for a further 30 years. It has a total lettable area of 20,231 sq metres.

A-Reit's manager says there is potential to create a further 1,200 sq metres of lettable space.

According to a report last year, Acer is paying JTC an annual land rent of $715,469 with escalation of 4 per cent a year as of Q3 2007.

The new owner is expected to pay JTC a slightly higher land rent each year, according to the report.

BT understands that A-Reit should enjoy considerable upside from positive rental reversion, as a number of leases in the building are up for renewal in the next one to two years.

Some of these tenants are paying monthly rent of $2 to $2.60 psf, whereas current rents for similar properties in International Business Park are $3.20 to $3.60 psf.

Besides Acer, other tenants in the building include Jacobs Engineering, Converge Asia and Nortrans Shipping.