CLAR expands US logistics portfolio with first sale and leaseback acquisition for $150.3 million
CapitaLand Ascendas REIT (CLAR) has recently offered to obtain DHL Indianapolis Logistics Center, a Class A logistics building, from Exel Inc. d/b/a DHL Supply Chain (DHL USA) for $150.3 million. This is a 4.1% price cut to the independent market valuation of the property as at Jan 1, 2025.
William Tay, executive director and CEO of the manager, says: “DHL Indianapolis Logistics Center is a strategic fit with our existing profile … This is CLAR’s very first sale and leaseback purchase in the US and including this Class A logistics estate, modern-day logistics investments will certainly represent 42.3% of our US logistics possessions under administration. With the extensive contract in effect, this property will better improve CLAR’s resistant earnings stream, and we expect the two brand-new real estates to add favorably to our extended returns.”
The first-year net property income (NPI) yield of the suggested procurement is approximately 7.6% pre-transaction expenses and 7.4% post-transaction costs. The pro forma effect on the distribution per unit (DPU) for the financial year ended Dec 31, 2023 is expected to be an improvement of about 0.019 Singapore cents, or a DPU accretion of 0.1%, thinking the recommended procurement was completed on Jan 1, 2023.
Completed in 2022, the commercial property stands in Whiteland, a submarket in southeast Indianapolis, Indiana. The property is a completely air-conditioned, single-storey logistics building with a GFA of 979,649 sq ft.
The manager intends to fund the total acquisition cost via a combination of inner resources, divestment proceeds and/or existing financial debt centers, according to a Dec 17 news release.
After including transaction-related fees and costs of $1.7 million, together with a $1.5 million acquisition cost paid to the supervisor, the overall purchase expense will most likely be $153.4 million.
Apart from this newest real estate in Indianapolis, CLAR’s logistics assets in the United States rise in Kansas City, Chicago and Charleston.
The wholly taken up property, with its weighted average lease to expiry (WALE) of around 11 years, will increase CLAR’s US profile WALE from 4.2 years to 4.7 years on a pro forma basis.
Following the acquisition, DHL United States will become part of an extended leaseback till December 2035 of the real estate’s overall gross floor area (GFA) with options to extend for two extra five-year terms.
The purchase will enhance the worth of CLAR’s logistics assets under management (AUM) in the United States by 35.3% to some $587.5 million. With this procurement, CLAR’s logistics presence in the US will definitely broaden to 20 properties throughout four towns with a complete GFA of roughly 5.1 million sq ft.
The long lease term of about 11 years with built-in rental fee escalation of 3.5% per year will certainly give earnings stability and reinforce the durability of CLAR’s selection, claims the supervisor.
