Capitaland Ascendas Reit Proposes Acquire Three Industrial And Logistics Properties Singapore 5658
CapitaLand Ascendas REIT (CLAR) has recently announced its plans to acquire three properties in Singapore with a total consideration of $565.8 million. This includes the estimated upfront land and enhancement premiums of $33.2 million. The portfolio, which is independently valued at around $589 million, comprises a four-storey ramp-up logistics property at 2 Pioneer Sector 1, a light industrial property on Tuas Loop called Tuas Connection, and an eight-storey high-specifications industrial property at 9 Kallang Sector.
This acquisition will significantly increase the value of CLAR’s Singapore portfolio to about $12.3 billion and will account for 68% of its total assets under management (AUM). The target properties are fully occupied by 19 tenants, with a long weighted average lease expiry (WALE) of approximately 5.5 years. These tenants are publicly listed companies and multinational corporations in industries such as electronics & semiconductors, transportation & logistics, precision engineering, and pharmaceuticals & life sciences.
CLAR expects rental growth opportunities with rental escalations ranging from 1% to 5% per annum in most of the leases. In addition, the in-place rents are about 15% below market rents, which presents the opportunity for rental uplift in the future.
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According to the REIT manager’s announcement, the proposed acquisition is expected to be accretive to CLAR’s distribution per unit (DPU). The expected first-year net property yield is around 6.4% pre-transaction costs and 6.1% post-transaction costs. In the case that the acquisitions are completed on January 1, 2024, CLAR’s DPU is expected to improve by around 0.124 cents or 0.8% for the FY2024 ended on December 31, 2024, on a pro forma basis.
In line with the acquisitions, CLAR’s trustee has entered into conditional put and call option agreements with DBS Trustee Limited for 2 Pioneer Sector 1 and Tuas Connection. DBS Trustee is the trustee of Supreme REIT. Additionally, CLAR’s trustee has also entered into a share sale agreement with Supreme REIT and Clay SG Holdings I Pte. Ltd. to acquire 100% of the issued share capital of Waterbay Investment Pte. Ltd., the registered proprietor of the property located at 9 Kallang Sector.
William Tay, the executive director and CEO of CLAR’s manager, believes that these accretive acquisitions will enhance the resilience of CLAR’s income stream and build on their recent acquisitions of a Tier III colocation data centre and a premium business space property, which were completed in August. Tay also adds that the properties’ strong lease profile is a rare and attractive opportunity in Singapore’s industrial property market.
This story first appeared on https://www.edgeprop.sg/property-news/capitaland-ascendas-reit-acquire-properties-singapore-5658-mil.