CLAR expands US logistics portfolio with first sale and leaseback acquisition for $150.3 million
The long lease term of roughly 11 years with integrated lease escalation of 3.5% per annum will certainly offer income stability and enhance the durability of CLAR’s portfolio, says the supervisor.
CapitaLand Ascendas REIT (CLAR) has offered to acquire DHL Indianapolis Logistics Center, a Class A logistics property, from Exel Inc. d/b/a DHL Supply Chain (DHL USA) for $150.3 million. This is a 4.1% discount to the independent market evaluation of the estate as at Jan 1, 2025.
The procurement 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 footprint in the America will broaden to 20 properties throughout four metros with an overall GFA of roughly 5.1 million sq ft.
Following the acquisition, DHL USA will become part of a long-term leaseback till December 2035 of the property’s overall gross floor area (GFA) with choices to continue for two extra five-year terms.
The first-year net property income (NPI) yield of the recommended acquisition is about 7.6% pre-transaction prices and 7.4% post-transaction prices. The pro forma effect on the distribution per unit (DPU) for the financial year stopped Dec 31, 2023 is expected to be an improvement of about 0.019 Singapore cents, or a DPU rise of 0.1%, presuming the recommended purchase was completed on Jan 1, 2023.
The manager plans to pay for the total acquisition charge via a combination of inner resources, divestment proceeds and/or existing financial debt facilities, according to a Dec 17 news release.
The fully occupied building, with its weighted average lease to expiry (WALE) of about 11 years, will certainly increase CLAR’s United States portfolio WALE from 4.2 years to 4.7 years on a pro forma basis.
After adding transaction-related fees and expenses of $1.7 million, together with a $1.5 million acquisition charge settled to the manager, the complete procurement price are going to be $153.4 million.
Completed in 2022, the commercial property is located in Whiteland, a submarket in southeast Indianapolis, Indiana. The building is an entirely air-conditioned, single-storey logistics building with a GFA of 979,649 sq ft.
Besides this latest real estate in Indianapolis, CLAR’s logistics possessions in the United States are located in Kansas City, Chicago and Charleston.
William Tay, executive director and chief executive officer of the manager, says: “DHL Indianapolis Logistics Center is a strategic fit with our existing portfolio … This is CLAR’s very first sale and leaseback acquisition in the US and including this Class A logistics estate, modern logistics assets will make up 42.3% of our US logistics assets under control. With the long lease in effect, this property is going to better improve CLAR’s resistant earnings stream, and we expect the two brand-new properties to contribute favorably to our extended returns.”
