Clar Expands Us Logistics Portfolio First Sale And Leaseback Acquisition 1503 Million
CapitaLand Ascendas REIT has announced its intention to purchase DHL Indianapolis Logistics Center, a top-of-the-line logistics property, from Exel Inc. for $150.3 million. This figure represents a 4.1% discount to the independent market valuation of the property as of Jan 1, 2025. After factoring in transaction-related fees, expenses, and an acquisition fee of $1.5 million paid to the manager, the total acquisition cost will be $153.4 million.
The property will be financed using a combination of internal resources, divestment proceeds, and/or existing debt facilities, as stated in a Dec 17 press release. Following the acquisition, DHL USA will enter into a long-term leaseback agreement until December 2035 for the entire gross floor area (GFA) of the property, with options to renew for two additional five-year terms. The lease term of approximately 11 years, with a built-in rent escalation of 3.5% per annum, will provide a stable income stream and enhance the resilience of CLAR’s portfolio, according to the manager.
The property is fully occupied and has a weighted average lease to expiry (WALE) of approximately 11 years, which will improve 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 acquisition will have a positive impact on the distribution per unit (DPU) for the financial year ended Dec 31, 2023, with an estimated improvement of 0.019 Singapore cents, or a DPU accretion of 0.1%, assuming the purchase was finalized on Jan 1, 2023.
The property, which was completed in 2022, is situated in Whiteland, a submarket in southeast Indianapolis, Indiana. It is a fully air-conditioned, single-storey logistics building with a GFA of 979,649 sq ft. The acquisition will boost CLAR’s logistics assets under management (AUM) in the US by 35.3% to approximately $587.5 million. With this addition, CLAR’s logistics portfolio in the US will expand to 20 properties in four cities, with a total GFA of approximately 5.1 million sq ft.
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Apart from this latest property in Indianapolis, CLAR’s logistics assets in the US can be found in Kansas City, Chicago, and Charleston. William Tay, executive director and CEO of the manager, acknowledged that the DHL Indianapolis Logistics Center is a strategic fit with the existing portfolio. He also noted that this is CLAR’s first sale and leaseback acquisition in the US, and that modern logistics assets will now account for 42.3% of its US logistics AUM. Tay further added that with the long lease in place, this property will contribute positively to CLAR’s long-term returns.