CapitaLand Ascendas India Business Trust acquires new properties worth $47 mil for expansion
CapitaLand Ascendas REIT (CLAR) has announced the proposed acquisition of DHL Indianapolis Logistics Center, a top-notch logistics property, from Exel Inc. d/b/a DHL Supply Chain (DHL USA) at a discounted price of $150.3 million. The independent market valuation shows a 4.1% discount as of January 1, 2025.
After incorporating related expenses of $1.7 million, along with a $1.5 million acquisition fee paid to the manager, the total cost of acquisition will be $153.4 million. In a press release on December 17th, the manager intends to cover the total cost through a combination of internal resources, divestment proceeds, and existing debt facilities.
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In addition, DHL USA has agreed to a long-term leaseback that will last until December 2035, with options to extend for two further five-year terms. This long lease term, along with a built-in rent escalation of 3.5%, will provide income stability and strengthen the resilience of CLAR’s portfolio, according to the manager.
The property is fully occupied, with a weighted average lease expiry (WALE) of approximately 11 years. This will increase CLAR’s US portfolio WALE from 4.2 years to 4.7 years on a pro forma basis. The first-year net property income (NPI) yield of the proposed acquisition is approximately 7.6% pre-transaction costs and 7.4% post-transaction costs. It is expected that the pro forma impact on the distribution per unit (DPU) for the financial year ending December 31, 2023, will result in an improvement of approximately 0.019 Singapore cents, or a DPU accretion of 0.1%, provided the acquisition is completed by January 1, 2023.
Located in Whiteland, a submarket in southeast Indianapolis, Indiana, the property was completed in 2022. It is a fully air-conditioned, single-story logistics building with a gross floor area of 979,649 square feet. This acquisition will increase the value of CLAR’s logistics assets under management (AUM) in the US by 35.3%, reaching $587.5 million. This addition will expand CLAR’s logistics footprint in the US to 20 properties in four cities, with a total gross floor area of about 5.1 million square feet.
Excluding the recently acquired property, the remaining logistics assets of CLAR in the US are situated in Kansas City, Chicago, and Charleston, in addition to this latest property in Indianapolis.
William Tay, the executive director, and CEO of the manager expressed, “DHL Indianapolis Logistics Center is a strategic asset that complements our existing portfolio… This is CLAR’s first sale and leaseback acquisition in the US, and including this top-notch logistics property, modern logistics assets will account for 42.3% of our US logistics AUM. With the long lease in place, this property will further enhance CLAR’s robust income stream, and we anticipate that the two new properties will contribute positively to our long-term returns.”