Investment risk
Investment risk arises when a-iTrust develops
existing land within the portfolio, acquires
new properties, or does not divest existing
investments when it is timely to do so. Such risks
encompass market risk as well as the impact
of the investment on the existing portfolio.
We adopt the following measures
to mitigate investment risk:
•
A research-driven investment approach
focusing on the national macroeconomic
outlook, analysis of the relevant micro real
estate markets (including supply and demand,
vacancy and rental), and detailed asset analysis;
CASE STUDY: Acquisition of CyberVale
In March 2015, a-iTrust completed the acquisition of
CyberVale from its sponsor, Ascendas-Singbridge Group,
for a purchase consideration of 1.62 billion (S$35.2
million)
1
. CyberVale is located within Mahindra World
City, a 1,550 acres business city in Chennai. The property
comprises two operational buildings with 0.57 million
sq ft, and vacant land that can yield a 0.37 million sq ft
IT building. CyberVale has a stable income profile with
Renault Nissan as its anchor tenant.
In March 2016, a-iTrust completed the acquisition of
the third building with floor area of 0.28 million sq ft
within CyberVale. With this acquisition, a-iTrust owns
all the operational buildings within the CyberVale
campus, further strengthening a-iTrust’s presence in
Chennai. This recent acquisition complements our
acquisition of the first two buildings in CyberVale last
year as it caters to Renault Nissan’s expansion needs.
Renault Nissan, an anchor tenant in CyberVale, has
pre-committed to leasing 61% of the third building.
The purchase consideration of 642.7 million
(S$13.2 million)
1
will be paid in tranches as and
when the space is leased (subject to a deadline of
May 2019 for payment of full consideration). This
deferred payment structure minimizes the leasing risk
and income drag arising from the vacant space.
1
Amount translated into Singapore Dollar using spot exchange rate
at the time of investment.
•
Detailed property and technical due
diligence prior to any new acquisition;
•
Independent valuation as a guide
to the purchase price;
•
Detailed evaluation of the impact of the
proposed acquisition on the portfolio income,
geographical and tenant diversification,
and lease expiry profile; and
•
Review and approval of the investment by the
Investment Committee and Board of Directors.
.25
ASCENDAS india trust ANNUAL REPORT
2015/2016
Ove r v i ew
what af f ect s us
what we do
our p e r formance
