a-iTrust – BT

Ascendas India Trust snaps up five buildings in Hyderabad

ASCENDAS India Trust (a-iTrust) announced yesterday that it will acquire five buildings in Hyderabad, India with a total built-up area of 2.2 million square feet.

Two of the buildings – which are completed and 100 per cent occupied – will be acquired for 1.74 billion rupees (S$48.8 million). The total purchase cost would be 1.77 billion rupees if transaction expenses were to be included.

The other three buildings are expected to be completed over the next four to five years. Based on estimated net property income, they will cost 6.81 billion rupees.

All five buildings are expected to be acquired from Indian property developer Phoenix Infocity Private Limited. Upon acquisition, the buildings – situated in Hitec City 2 Special Economic Zone – will be managed by Ascendas Group.

While the two completed buildings will be immediately acquired, a-iTrust said it will pay for the three other buildings as and when they are completed and leased.

The acquisition is expected to be distribution per unit accretive, with accretion from the acquisition of the two completed buildings estimated at 0.16 cents per unit in the first year, said a-iTrust. ‘Further accretion is expected from the acquisition of the remaining buildings over the next few years,’ it added.

If the acquisition is funded fully by debt, a-iTrust’s gearing will be 22 per cent after buying the two completed buildings, and 33 per cent after buying all five buildings over the next few years.

Ascendas Property Fund Trustee – the trustee-manger of a-iTrust – said it has ‘secured debt commitment from banks’.

‘We are optimistic that the demand for business space in Hyderabad will remain buoyant, supported by the city’s strong economic fundamentals and its IT sector,’ said Jonathan Yap, chief executive of Ascendas Property Fund Trustee. ‘Strong demand for business space has driven the occupancy of Hyderabad’s Grade A office space up, to 97 per cent as at Dec 31, 2010.’

The counter closed trading unchanged at 93.5 cents yesterday.