Initial yield of 6% only appears low at first glance.
Ascendas REIT continues to deepen its exposure to the business and science parks space as it acquired three properties in Science Park Drive at a price of $420m. Specifically, it is eyeing to acquire what is collectively known as DSO National Laboratories Buildings & DNV GL Technology Centre
According to DBS Group Research, the acquisition ticks most of the boxes -- long lease tenure at 16.5 years with annual escalations of 2% to 2.5% and long unexpired land lease tenure of about 65.7 years.
More so, it offers investors a deeper exposure to the research and development sector which continues to grow.
"The yield of 6.0% appears low at first glance but we believe it reflects the properties’ relatively young age (2 years) and long land lease tenure," DBS said.
DBS argues that with the properties' relative young age, Ascendas REIT will be able to refresh its portfolio and cement its significant market share within the Science Park space.