Singapore, February 07, 2012 -- Moody's Investors Service sees no immediate impact on the A3 corporate
family rating and Baa1 senior unsecured rating of Ascendas Real Estate
Investment Trust ("A-REIT") following its announcement
that it will be acquiring three properties in Science Park from its sponsor,
Ascendas Land (Singapore) Pte Ltd, for SGD183 million.
The rating outlook remains stable.
The three properties, Cintech I, Cintech II, as well
as Cintech III and Cintech IV, are all located within Singapore
Science Park I, which is one of the two designated Science Parks
in Singapore. The transaction is expected to be completed before
end-March 2012.
"The proposed acquisition is in line with A-REIT's
strategy to focus its expansion on the Science and Business park segments.
After the acquisition, the trust's exposure to the Science
Park segment will increase to 15% from the current 12%,"
says Alvin Tan, a Moody's Analyst.
The ages of the properties range between 3 and 24 years, and sit
on 56-year land leases from their dates of completion. These
are multi-tenanted properties with typically three-year
leases. Occupancies remain high at 90-100%.
Moody's expects improvements at these properties, given their
relatively older ages, to enhance their rental yields.
Up to 50% of the total purchase consideration, or SGD91.5
million, could be funded via the issuance of units to Ascendas Land.
Although the seller can decide on the amount of equity consideration it
wishes to obtain for the transaction, A-REIT has absolute
discretion on determining whether to pay any part of the purchase consideration
with equity. The remaining amounts will be funded through internal
sources of funds and/or existing debt facilities.
"Assuming the proposed acquisitions, which represent approximately
3% of A-REIT's current portfolio by value, are
entirely debt-financed, A-REIT's aggregate leverage
will increase marginally to 36.2% from 34.3%
as at 31 December 2011, and which would remain appropriate for its
A3 corporate family rating," says Tan.
As A-REIT continues to grow its portfolio, Moody's
expects the trust to adhere to its prudent operating and financial policies,
yet maintain its current credit profile.
Please see ratings tab on the issuer/entity page on www.moodys.com
for the last rating action and the rating history.
The principal methodology used in this rating was "Moody's Approach
for REITs and Other Commercial Property Firms" published in July 2010.
Please see the Credit Policy page on www.moodys.com for
a copy of this methodology.
Headquartered in Singapore, Ascendas Real Estate Investment Trust
has a diversified portfolio of 96 properties in Singapore, comprising
business and science park properties, hi-tech industrial
properties, light industrial properties, and logistics and
distribution centres.
Alvin Tan
Analyst
Corporate Finance Group
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (65) 6398-8308
Philipp L. Lotter
Associate Managing Director
Corporate Finance Group
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (65) 6398-8308
Releasing Office:
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (65) 6398-8308
Moody's: No immediate impact on A-REIT's A3 rating from Science Park expansion