AIMS APAC REIT (SGX: O5RU) has recently secured a 12-year master lease with Singtel Optus, at the Optus Centre in Macquarie Park, Australia. Singtel Optus will remain as its largest tenant contributing 12.3% of gross rental income.
What You Need To Know
The asset enhancement initiative was started as the result of Singtel Optus' competitive tender process since three years ago. The tenant has laid out stringent requirements, from building specifications, services, to amenities, property management and costs schedule. Securing the master lease shows that AIMS Apac REIT can meet and fulfill the tenants' requirements.
The property, Macquarie Park is owned by Macquarie Park Trust, which is a joint venture between AIMS Apac REIT (49%) and Stockland (51%). The new lease will kick start on Jul 2021 after the completion of the asset enhancement works.
The new tenancy agreement is embedded with an annual rental escalation of 3.25%. The estimated net property income for the first year is A$28.3m. The valuation of the property will improve the NAV per share to $1.38 as compared to $1.32 in Sep 2019.
The new lease also lengthened the weighted average lease expiry of the REIT to 3.8 years, up from 2.45 years in Sep 2019.
From the mid to long term, this will a good news for AIMs Apac REIT. Post-asset enhancement works, the property is both NAV and income accretive. The only thing that investors need to take note is that the additional income will only kick start in 2021.