Ascendas REIT to Acquire Singapore Cold Chain Facility From PGIM for $136M

Ascendas REIT has agreed to acquire a food storage and distribution centre in western Singapore from PGIM Real Estate for S$191.9 million ($136.5 million), marking the SGX-listed trust’s first investment in a cold chain facility in the city-state.

The leasehold property at 1 Buroh Lane in Jurong East provides 59,971 square metres (645,522 square feet) of gross floor area and is fully occupied by five tenants, including a supermarket chain and leading distributors of fruits and vegetables, Ascendas REIT’s manager said Wednesday in a release.

After making its name as an owner of office parks, Ascendas REIT has looked to expand its logistics portfolio, including with the June purchase of seven Chicago-area warehouses from investment vehicles managed by private equity giant Blackstone.

“This modern Grade A five-storey ramp-up logistics facility is one of the best cold storage facilities in Singapore,” said William Tay, executive director and CEO of the trust’s manager. “Featuring a good combination of chiller, freezer and ambient storage spaces, it caters to a diverse food and beverage storage requirements.”

In the Food Zone

PGIM bought 1 Buroh Lane in 2017 for S$193.8 million, according to the Business Times. Media reports at the time noted that the acquisition was made on behalf of the US-based firm’s pan-Asia value-add fund. PGIM had not responded to a request for comment at the time of publication.

The fund manager was represented in the sale by CBRE Singapore, which talked up the property’s direct access to the Ayer Rajah Expressway and proximity to major ports like Jurong, Tuas Mega and the Pasir Panjang Terminals.

“By virtue of its excellent property specifications and its location within the Fishery Port Food Zone, 1 Buroh Lane consistently enjoys 100 percent building occupancy,” said the deal’s broker, Rimon Ambarchi, head of industrial and logistics for Singapore and Southeast Asia at CBRE. “This acquisition offers the buyer an immediate robust income stream, supported by a stellar tenant roster with long and stable leases.”

Ascenda REIT’s consideration of S$191.9 million for the facility equates to S$3,200 ($2,276) per square metre of gross floor area. The property has a weighted average lease expiry of seven years and a remaining land lease tenure of 21 years.

Warehouse Wave

Ascendas REIT is confident of achieving good rental growth with 1 Buroh Lane because of Singapore’s limited supply and strong demand for cold storage, Tay said.

With the inclusion of the latest acquisition and the Chicago portfolio, the proportion of logistics assets will rise to 26 percent of the trust’s total investment properties valued at S$16.75 billion. Ascendas REIT will own 230 properties comprising 97 in Singapore, 48 in the US, 36 in Australia and 49 in the UK and Europe.

The trust’s other major transaction in 2022 was the S$104.8 million acquisition of Philips APAC Centre, the Dutch electronics giant’s Singapore headquarters, in a sale-leaseback deal announced in August.

Ascendas REIT’s manager is wholly owned by CapitaLand Investment, the SGX-listed asset management arm of the Singaporean property giant. CapitaLand Investment had S$122.9 billion in real estate assets under management and S$86.2 billion in real estate funds under management at the end of 2021.