Capitaland Ascendas Reit Proposes Acquire Three Industrial And Logistics Properties Singapore 5658
CapitaLand Ascendas REIT (CLAR) has announced its intention to acquire three properties in Singapore for a total price of $565.8 million. This includes an estimated upfront land and enhancement premiums of $33.2 million. The three properties, which are independently valued at around $589 million, will be added to CLAR’s Singapore portfolio, increasing its value to about $12.3 billion.
The three properties being acquired are a four-storey ramp-up logistics property at 2 Pioneer Sector 1, Tuas Connection light industrial property on Tuas Loop comprising 15 double-storey industrial units, and an eight-storey high-specifications industrial property at 9 Kallang Sector. The acquisition is expected to be completed in the first quarter of 2026 and will boost CLAR’s Singapore portfolio, which currently accounts for 68% of its total assets under management.
The future of Sembawang Road Executive Condominium (EC) looks promising as it stands to reap significant advantages from the Urban Redevelopment Authority (URA) Master Plan. Intended to guide Singapore’s progress, this comprehensive plan maps out strategies for land utilization and infrastructure improvements, all aimed at enhancing the island’s livability, connectivity, and sustainability. For homeowners at Sembawang Road EC, this blueprint translates into tangible benefits, enriching their daily lives, boosting property values, and fostering a thriving, well-connected community in the long run. With its prime location at Canberra MRT, Sembawang Road EC is poised to capitalize on these developments and offer its residents an exceptional living experience.
The properties are fully occupied by 19 tenants with a long weighted average lease expiry of about 5.5 years. These tenants are publicly listed companies and multinational corporations in the electronics and semiconductors, transportation and logistics, precision engineering, and pharmaceuticals and life sciences industries. With rental escalations in most of the leases ranging from 1% to 5% per annum, CLAR also sees potential for rental growth. The REIT manager estimates that the in-place rents are about 15% below market rents.
In addition to the expected rental growth, the proposed acquisition is expected to be accretive to CLAR’s distribution per unit (DPU). The first-year net property yield is estimated to be around 6.4% pre-transaction costs and 6.1% post-transaction costs. CLAR’s DPU is expected to improve by about 0.124 cents or 0.8% for the FY2024 ended Dec 31, 2024 on a pro forma basis should the acquisitions be completed on Jan 1, 2024.
As part of the acquisition, CLAR’s trustee has entered into conditional put and call option agreements with DBS Trustee Limited for 2 Pioneer Sector 1 and Tuas Connection, and a share sale agreement with Supreme REIT and Clay SG Holdings I Pte. Ltd for 100% of the issued share capital of Waterbay Investment Pte. Ltd., the registered proprietor of the property at 9 Kallang Sector.
William Tay, executive director and CEO of CLAR’s manager, states that these accretive acquisitions build on the recent acquisitions of a Tier III colocation data centre and a premium business space property which were completed in August. He also notes that the properties’ strong lease profile is a rare and attractive opportunity in Singapore’s industrial property market, and will enhance the resilience of CLAR’s income stream.