Clar Expands Us Logistics Portfolio First Sale And Leaseback Acquisition 1503 Million
CapitaLand Ascendas REIT (CLAR) has announced its plans to acquire the DHL Indianapolis Logistics Center, a top-of-the-line logistics property, from Exel Inc. d/b/a DHL Supply Chain (DHL USA) for $150.3 million. This proposed acquisition comes at a 4.1% discount to the property’s independent market valuation as of Jan 1, 2025.
After including transaction-related fees and expenses of $1.7 million, along with a $1.5 million acquisition fee paid to the manager, the total cost of the acquisition will be $153.4 million. The manager plans to finance this cost through a combination of internal resources, divestment proceeds, and/or existing debt facilities, according to a press release dated Dec 17.
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Following the acquisition, DHL USA will enter into a long-term leaseback agreement that will last until December 2035, with options to renew for two additional five-year terms. This will provide income stability and add to the resilience of CLAR’s portfolio, given the long lease term of approximately 11 years which also includes built-in rent escalation of 3.5% per annum.
The property, which is fully occupied, has a weighted average lease to expiry (WALE) of around 11 years, which will help 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 expected to be approximately 7.6% pre-transaction costs and 7.4% post-transaction costs. This will have a positive impact on the distribution per unit (DPU) for the financial year ended Dec 31, 2023 with a DPU accretion of 0.1%, assuming the acquisition is completed on Jan 1, 2023.
The property, located in Whiteland, Indianapolis, is a newly constructed logistics building, completed in 2022. It has a gross floor area (GFA) of 979,649 sq ft and is fully air-conditioned.
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Following the acquisition, the value of CLAR’s logistics assets under management (AUM) in the US will increase by 35.3%, amounting to about $587.5 million. This will expand CLAR’s logistics footprint to 20 properties across four cities, with a total GFA of approximately 5.1 million sq ft. In addition to the latest property acquisition in Indianapolis, CLAR’s logistics assets in the US are located in Kansas City, Chicago, and Charleston.
William Tay, executive director and CEO of the manager, explains that the DHL Indianapolis Logistics Center is a strategic fit with their current portfolio and this is CLAR’s first sale and leaseback acquisition in the US. With this Class A logistics property, modern logistics assets will now account for 42.3% of their US logistics AUM. Tay also adds that with the long lease in place, this property will further enhance CLAR’s resilient income stream, and they expect the two new properties to contribute positively to their long-term returns.