The manager of Frasers Logistics & Commercial Trust (FLCT) has proposed to acquire three fully leased freehold logistics and industrial properties in Australia for a total consideration of A$61.0 million ($60.4 million).
The total cost of the acquisition is estimated to be A$65.9 million, which comprises the portfolio purchase price as well as the stamp duty and other fees. The acquisition will be fully funded by the divestment proceeds of Cross Street Exchange in Singapore.
The properties were acquired from an unrelated third party, West Industry Park Pty Ltd.
They are located in Truganina, Victoria, Australia, which is a key industrial precinct in Melbourne’s West, some 20km away from Melbourne’s central business district (CBD).
The precinct is said to have enjoyed continued growth in occupier demand, with total take-up at 205,690 sqm for the first quarter of 2022, remaining well above the 10-year quarterly average of 119,130 sqm, according to JLL Research.
The properties comprise three buildings which were newly completed in early May. They have a total lettable area of 25,089 sqm. The properties are fully leased to four tenants with a weighted average lease expiry (WALE) of 6.6 years and will benefit from fixed annual rent increments of 3.0%.
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The acquisition is said to enhance FLCT’s presence in the Australian logistics and industrial market and increase the REIT’s logistics and industrial exposure to 66.3%, up 0.3 percentage points before.
The purchase price took into consideration the independent valuation conducted by Savills Valuations Pty Ltd at A$61.1 million as at May 31. The Savills valuation is based on the capitalisation and discounted cash flow approaches and referenced comparable market transactions.
The acquisition is expected to be completed by the third quarter of 2022.
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Post-acquisition, FLCT’s portfolio WALE and occupancy rate will remain at 4.6 years and 96.2%, respectively.
Units in FLCT closed 1 cent lower or 0.75% down at $1.33 on June 10.
