ESR-REIT Announces Major Portfolio Acquisition of Institutional-Grade Freehold Logistics Assets in Melbourne, Australia

Key Highlights

• Acquisition of Six Modern Freehold Logistics Properties: ESR-REIT is acquiring a portfolio of six institutional-grade freehold logistics assets in Melbourne, Australia, including the newly announced 18 Foxley Court (18FC), for a combined purchase consideration of A\$341.1 million (approx. S\$305.4 million).
• 18 Foxley Court Acquisition: 100% interest in 18FC, a 9-year-old, 23,229 sqm freehold property, fully leased to HealthShare Victoria, a government-backed agency. Purchase price is A\$52.5 million (approx. S\$47.0 million).
• Portfolio Scale and Quality: The total portfolio spans 145,640 sqm GLA across six assets with an average building age of 10 years, 92.3% occupancy, and a weighted average lease expiry (WALE) of 3.5 years. High-quality tenants include CEVA Logistics, Silk Logistics, Nick Scali, and HealthShare Victoria.
• Discount to Replacement Cost and Market Valuation: 18FC is acquired at a 9.5% discount to estimated replacement cost, and the broader portfolio at a 1.6% discount to independent market valuation.
• DPU Accretion: The acquisition is expected to be DPU accretive, with an estimated +5.1% uplift to pro forma FY2025 DPU.
• Financing Structure: Entirely funded by divestment proceeds (S\$439.1 million from Singapore assets) and debt, with no new units issued. Management may issue S\$200 million in perpetual securities to strengthen the balance sheet and reduce leverage.
• Strategic Rationale: The acquisition aligns with ESR-REIT’s Total Return Strategy to drive sustainable income growth and long-term capital appreciation through high-quality, modern freehold logistics assets in core Asia-Pacific markets.
• Portfolio Enhancement: Increases freehold asset proportion from 19.3% to 24.2% and extends portfolio land tenure from 44.9 to 48.2 years.
• Aggregate Leverage: Pro forma leverage expected at 42.5%, improved to 38.7% if perpetual securities are issued, maintaining a prudent capital structure.
• Transaction Classification: Classified as a “discloseable transaction” under SGX Listing Manual; no unitholder approval required as relative figures do not exceed 20%.

Detailed Transaction Overview

ESR-REIT, through its subsidiaries, has entered into formal agreements to acquire 100% of 18 Foxley Court, Derrimut, Melbourne, for A\$52.5 million. This sixth property complements an earlier-announced portfolio of five freehold logistics assets in Melbourne, taking the total acquisition value to A\$341.1 million. All assets are strategically located within major industrial precincts, enjoying strong connectivity and access to key infrastructure and employment hubs.

The 18FC property, with 23,229 sqm of GLA, is fully leased to HealthShare Victoria with a WALE of 4.8 years. The combined portfolio’s occupancy stands at 92.3%, with the only vacancy at 39 Naxos Way, Keysborough, covered by a one-year rental guarantee from the vendor for the vacant portion.

Independent valuation by Jones Lang LaSalle (JLL) pegs 18FC at A\$52.5 million (matching the purchase price), and the full portfolio at A\$334.7 million (excluding rental guarantee), resulting in an acquisition at a discount to market values. The acquisition is also priced at a 9.5% discount to the estimated replacement cost for 18FC.

Financial Impact and Price-Sensitive Matters

• Accretive to Distribution Per Unit (DPU): On a pro forma FY2025 basis, the portfolio acquisition is expected to increase DPU by approximately 5.1% (from 20.091 cents to 21.109 cents). Even with perpetual securities issuance, DPU accretion remains positive at +1.6%.
• Balance Sheet Impact: Pro forma aggregate leverage is expected to be 42.5%. If S\$200 million in perpetual securities is issued, leverage will improve to 38.7%, providing headroom for future growth.
• No Equity Dilution: The Manager does not intend to issue new units, preserving existing unitholder value.
• Portfolio Transformation: The reallocation of capital from the divestment of non-core Singapore assets (short tenure, older specs) to modern, freehold Australian logistics assets significantly enhances the quality, tenure, and resilience of ESR-REIT’s portfolio.
• Foreign Exchange Exposure: 32.3% of assets will be subject to FX movements post-acquisition, but natural hedging strategies are in place: 97% of JPY assets and 31% of AUD assets are funded in their respective currencies.

Strategic Rationale and Market Implications

• Supports Growth and Diversification: The acquisition aligns with ESR-REIT’s strategy to drive total unitholder returns via high-quality, income-generating assets and greater regional diversification—especially in established logistics markets such as Australia and Japan.
• Leverage on Sponsor’s Platform: The Sponsor’s on-the-ground presence in Australia enabled ESR-REIT to secure assets both via competitive sales processes and off-market deals, illustrating robust sourcing capabilities.
• Compelling Sector Fundamentals: The Australian logistics sector is benefiting from resilient occupier demand, supply chain modernization, and secular growth, supporting long-term rental growth and value creation.
• Potential Rental Upside: Current in-place rents for shorter-term leases are 12-17% below market, providing scope for positive reversions. Longer-term leases have built-in annual escalations (3.0%-3.5% or inflation-linked).

Breakdown of Portfolio Assets

Risks and Shareholder Considerations

• Price Sensitive: The accretive impact on DPU, increased freehold exposure, leverage profile, and improved portfolio quality are likely to be seen as positive catalysts for ESR-REIT’s share price.
• Execution Risk: Successful completion depends on timely divestment of Singapore assets and fundraising via perpetual securities if chosen.
• FX Exposure: While natural hedges are in place, macroeconomic movements in AUD and JPY could impact reported results.
• No Unitholder Dilution: No new units will be issued, protecting existing unitholder value.

Conclusion

ESR-REIT’s acquisition of six institutional-grade freehold logistics assets in Melbourne marks a significant portfolio transformation, enhancing income quality, resilience, and regional diversification. Investors should monitor progress on divestments, completion of the acquisition, and any perpetual securities issuance, all of which are key to the accretive outcomes outlined.

Disclaimer

The information above is for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. Investors should conduct their own due diligence and consult their financial advisers before making investment decisions. Past performance is not indicative of future results. Actual outcomes may differ from forward-looking statements due to market, regulatory, and operational risks.

ESR-REIT宣布收购墨尔本六处永久产权优质物流资产——投资者须知重点

• 收购六项现代永久产权物流资产： ESR-REIT将以总价3.411亿澳元（约3.054亿新元）收购墨尔本六项机构级物流资产，包括新宣布的18 Foxley Court（18FC）。
• 18 Foxley Court详情： 100%收购该物业，建筑年龄9年，面积23,229平方米，100%租给政府背景的HealthShare Victoria，收购价5,250万澳元（约4,700万新元）。
• 组合规模与质量： 六项资产总建筑面积145,640平方米，平均建筑年龄10年，出租率92.3%，WALE为3.5年。主要租户包括CEVA Logistics、Silk Logistics、Nick Scali和HealthShare Victoria。
• 低于重置成本及市场估值： 18FC以较重置成本9.5%的折扣收购，整个组合较市场估值折让1.6%。
• DPU增厚： 预计可带来2025财年单位分派（DPU）约5.1%的增厚。
• 融资结构： 全部以新加坡资产处置所得（4.391亿新元）及债务融资，无需发行新单位。管理层可能发行2亿新元永续证券以优化资产负债表。
• 战略意义： 本次收购契合ESR-REIT“总回报策略”，通过优质现代物流资产驱动收入与资本增值。
• 组合优化： 永久产权资产占比将由19.3%提升至24.2%，土地年限由44.9年延长至48.2年。
• 杠杆率： 预计完成后总杠杆率为42.5%；若发行永续证券，可降至38.7%，维持稳健财务结构。
• 交易分类： 按新交所规则为“可披露交易”，无需获得持有人批准。

投资者需关注的重要事项

• 价格敏感： DPU增厚、永久产权提升、杠杆改善、资产质量优化等有望成为股价催化剂。
• 执行风险： 需关注新加坡资产处置、收购完成及永续证券发行进展。
• 外汇风险： 澳元与日元资产虽有天然对冲，汇率波动仍可能影响结果。
• 无现有持有人稀释： 不发行新单位，持有人利益不受稀释。

免责声明

本文仅供参考，不构成投资建议或买卖任何证券的要约。投资者应自行进行尽职调查，并咨询财务顾问。历史业绩不代表未来表现。实际结果或与前瞻性陈述有重大差异。

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