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Ascendas Real Estate Investment Trust Explains Its Acquisition Strategy

Ascendas Real Estate Investment Trust (SGX: A17U) held is second-quarter earnings briefing for its financial year ending 31 March 2017 (FY16/17) in October.

Ascendas REIT is one of the largest business space and industrial real estate investment trusts in Singapore. With more than 100 properties here, 28 properties in Australia, and one business park in China, the REIT’s total assets amount to more than S$9.5 billion as of 30 September 2016.

The REIT’s acquisition strategy was a topic of discussion during the briefing.

Chia Nam Toon, the chief executive for the REIT’s manager, shared his thoughts. He started with Singapore:

“We have always emphasized that this is home. Singapore is still our preferred place, if we can find something to buy. We are constantly spending a lot of time combing through the Singapore market to see if there’s any opportunities to buy anything.”

Ascendas REIT also made a big splash into Australia last year, picking up 26 properties for an estimated A$1 billion. Chia talked about the Australia move:

“… we will try to expand selectively the Australian business.

We believe that at the current scale, while it is reasonable as a starting platform, it is too subscale at the moment. We like to see, giving an indication of 5-6 years’ time, it will at least double in size.

We have bought one business park asset recently, the Mascot asset in Sydney. We like to see a bit more of that. That said because Australia is suddenly a hot favourite market for most private funds, there will be competition for those assets.

So we have to start building access through joint ventures, through talking to local players, working with local developers to see whether we can access in other forms and mode.”

With that, Chia said that Singapore and Australia will be the main focal point for Ascendas REIT for the time being. He left the door open for other countries, though, as he also mentioned China as another option if the opportunity arises:

“I did say some time ago that for China, if somebody comes along with a large enough platforms that gives us scale, that we can actually make sense of it, and at a reasonable price, we will look at that. Other than that, there are no plans for any other alternate market for the time being.”

Investors will have to weigh the benefits of the REIT going global against the risks involved, such as currency fluctuations and regulations.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.