A-REIT purchases a business space property in Shanghai

The company said acquisition of lot in Jinqiao Export and Processing Zone is a yield accretive investment with potential for capital appreciation.

The Board of Directors of Ascendas Funds Management (S) Limited (the “Manager”), the manager of Ascendas Real Estate Investment Trust (“A-REIT”), is pleased to announce that it will be acquiring a business space property located at No. 200 Jinsu Road, Jinqiao Export and Processing Zone (“JEPZ”), Pudong New District, Shanghai, China, according to an A-Reit report.

This will be effected through the entry into a Sale and Purchase Agreement (the “SPA”) with Hyday Holding Ltd. (the “Vendor”) (a subsidiary of Qingjian International (South Pacific) Group Development Co., Pte. Ltd. (“Qingjian”)) and Qingjian, for the acquisition of the entire issued and paid-up share capital (the “Shares”) of Shanghai (JQ) Investment Holdings Pte. Ltd. (a special purpose vehicle owned by the Vendor) for a total purchase consideration of approximately RMB 587.9 million (or about S$117.6 million) (the “Proposed Acquisition”).

Mr. Tan Ser Ping, Chief Executive Officer and Executive Director of the Manager said, “JEPZ is a well established state-level development zone in Shanghai. It is a preferred zone for many multi-national companies looking to set up research & development as well as technology support facilities and corporate headquarters within one location. Land supply is limited within this zone and thus this acquisition is a good opportunity to gain a foothold in JEPZ. This acquisition is in line with A-REIT’s focus to add value to its customers by serving their real estate needs in Singapore and around the region. For A-REIT’s investors, it is a yield accretive investment with potential for capital appreciation. It also allows them to gain exposure to a segment of the market which they, on their own, may not be able to efficiently do."

The Manager will continue to identify potential investment opportunities in Singapore and around the region i.e. acquisitions of income-producing assets as well as built-to-suit development for high credit quality tenants with the intention to deliver sustainable yield accretive returns for Unitholders. The Manager will also seek investments with good fundamentals and potential asset enhancement opportunities which complement its existing portfolio to further enhance its footprint in the business space and industrial property arena. For investments in China, the Manager will initially focus on major tier one cities such as Shanghai and in the segments of business & science parks, logistics and distribution centres as well as warehouse retail facilities. A-REIT’s portfolio will remain predominantly Singapore-based assets in the foreseeable future.”

Description of the Proposed Acquisition
The Proposed Acquisition is sited on a land area of 31,952sqm with expected gross floor area of approximately 79,880 sqm. It is located in North Jinqiao and within the JEPZ. It is near the Waihuan (External Ring) Expressway and 30km away from Pudong International Airport. It is also in close proximity to a Line 9 subway station which is expected to be operational by October 2011. This subway line will connect JEPZ to the core area of Shanghai World Expo as well as Xujiahui (one of the top commercial areas in Shanghai).

Based on market studies and local government statistics, demand for business space within the JEPZ has been robust. The Manager intends to market the property through its network of existing tenants as well as leveraging on Ascendas’ operating platform in China. In addition, to mitigate leasing risk, the Vendor will provide a RMB67.6 million (approximately S$13.5 million) rental guarantee to A-REIT upon completion of the transaction, which is expected in the second half of 2012.

The annualised pro forma financial effect of the Proposed Acquisition on the DPU for FY2009/10 is expected to be an additional 0.07 cents per unit (1) after applicable taxes in China.