Ascendas Reit to buy last mile logistics portfolio in US for US$156m

Ascendas Reit to buy last mile logistics portfolio in US for US$156m
Image: Courtesy of Ascendas Reit

Singapore-listed industrial real estate investment trust Ascendas Reit is acquiring a portfolio of 11 logistics properties located in Kansas City, United States for S$207.8 million (US$156 million) from ColFin 2017-11 Industrial Owner, LLC and ColFin Cobalt I-II Owner, LLC, third party vendors.

William Tay, Executive Director and Chief Executive Officer of the Manager said, “This acquisition of 11 logistics properties in Kansas City marks our first entry into the US logistics market and is complementary to Ascendas Reit’s existing logistics portfolio.”

”The strong market fundamentals driven by rising warehousing requirements for e-commerce fulfilment has led to record net absorption levels and rent growth across the country. We are confident of the growth potential of this portfolio given Kansas City’s geographically central location within the US and its well-developed transportation infrastructure.  We believe that there will be continuous high demand for this portfolio, which comprises 200,000 sqm of last mile logistics space offering convenient access to the domestic market, midwestern population centres and other commercial hubs across the country,” he added.

The properties are located in infill locations across the established submarkets of South Johnson County, North Johnson County, Eastern Jackson County and Northland.

Ascendas Reit said these four submarkets house approximately 70% of the overall inventory in the Kansas City market.

The properties have sizes that range between 6,800 sqm and 32,337 sqm which are well-suited for the typical mid-size space demand in the infill locations.

The highly attractive locations of the portfolio contribute to its strong retention rate, according to the company. Current tenants have been in place for an average of 12.5 years.

The portfolio is 92.6% occupied by 27 customers from diverse industries such as third-party logistics, wholesale distribution, manufacturing and healthcare.

No single customer contributes to more than 10% of the total rental income as at 30 September 2021 of the portfolio, thus minimising tenant concentration risk, noted the Manager.

The current leases also have built in annual rental escalations ranging between 2.5% and 3.0%.

The proposed acquisition is expected to increase and diversify Ascendas Reit’s exposure to logistics properties, the company said.

On a pro forma basis, the proposed acquisition will increase the proportion of logistics properties to 22% (S$3.5 billion) of total investment properties of S$16.2 billion (from 21% or S$3.3 billion as at 30 September 2021).