S-REIT acquisitions continued to pick up despite rising rates, with six S-Reits announcing deals in September, valued at approximately S$2.7 billion in total. These deals included property types such as data centres, logistics, healthcare as well as retail, and span across Germany, the United States, Japan and Singapore.
The month of September also saw maiden acquisitions from Digital Core Reit and Daiwa House Logistics Trust since their respective initial public offerings (IPOs) in 2021.
Daiwa House Logistics Trust (DHLT) announced the proposed acquisition of two freehold logistics facilities and a piece of freehold land located in Japan from sponsor Daiwa House Industry for a total consideration of 4.68 billion yen (S$45.1 million), representing a 11.8 per cent discount to the properties’ average appraised value.
The Reit manager expects the acquisition to increase the distribution per unit (DPU) for FY2022 by 1.3 per cent, on a pro forma basis. It also noted that the acquisition will diversify its portfolio across various regions in Japan, reducing geographical concentration risk while mitigating potential impact from earthquakes.
Digital Core Reit (DCREIT) has agreed to purchase a 25 per cent stake in a freehold data centre in Frankfurt, Germany, valued at US$558 million from its sponsor, Digital Realty, with the option to acquire up to 89.9 per cent interest in the Frankfurt facility and a 90 per cent interest in a freehold data centre in Dallas, Texas, valued at US$199 million. The eventual scenario will depend upon whether DCREIT raises capital through a debt or equity fundraising to partially fund the transaction.
The acquisition is expected to be DPU accretive by 2 per cent, or 3.1 per cent should DCREIT proceed with the larger deal. It would also allow DCREIT to expand into two new markets and reduce market concentration.
Aside from these two, there were also several Japan acquisitions made by healthcare S-Reits last month, including ParkwayLife Reit and First Reit.
ParkwayLife Reit completed two acquisitions in September, comprising two nursing homes in the Greater Tokyo region from Daiwa House Industry for a total consideration of 2.88 billion yen as well as three nursing homes – Blue Terrace Kagura, Blue Rise Nopporo and Blue Terrace Taisetsu – from Blue Melon Capital Kabushiki Kaisha and its subsidiary for a total consideration of 2.56 billion yen.
First Reit completed the acquisition of two nursing homes, Loyal Residence Ayase and Medical Rehabilitation Home Bon Sejour Komaki for a total purchase consideration of 2.6 billion yen. It noted that Japan is one of the key growth markets for First Reit, having completed the acquisition of 12 nursing homes earlier this year. The acquisitions are also in line with the First Reit 2.0 Growth Strategy to step up growth in developed markets to form more than 50 per cent of its portfolio.
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Originally Posted October 17, 2022 – REIT Watch – Maiden acquisitions made by S-Reits in September
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