Clar Expands Us Logistics Portfolio First Sale And Leaseback Acquisition 1503 Million
CapitaLand Ascendas REIT (CLAR) plans to acquire DHL Indianapolis Logistics Center in a move to expand its presence in the United States. The Class A logistics property, which is currently owned by Exel Inc. d/b/a DHL Supply Chain (DHL USA), was valued at $150.3 million on Jan 1, 2025. This represents a 4.1% discount to the property’s independent market valuation.
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The acquisition will be funded through a combination of internal resources, divestment proceeds, and/or existing debt facilities, according to a Dec 17 press release. In addition to the purchase price, $1.7 million in transaction-related fees and expenses will be incurred. The manager will also pay a $1.5 million acquisition fee.
Upon completion of the acquisition, DHL USA will enter into a long-term leaseback agreement for the entire gross floor area (GFA) of the property until December 2035, with options to renew for two additional five-year terms. This will provide CLAR with income stability and strengthen the resilience of its portfolio, as the lease term is approximately 11 years with a built-in rent escalation of 3.5% per annum.
The property, which is fully occupied, has a weighted average lease to expiry (WALE) of approximately 11 years. This will 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 approximately 7.6% before transaction costs and 7.4% after transaction costs. It is expected to have a pro forma impact of increasing the distribution per unit (DPU) by approximately 0.019 Singapore cents for the financial year ending Dec 31, 2023, or a DPU accretion of 0.1% if the acquisition is completed on Jan 1, 2023.
The property, which is expected to be completed in 2022, is located in Whiteland, a submarket in southeast Indianapolis, Indiana. It is a fully air-conditioned, single-story logistics building with a GFA of 979,649 sq ft. The acquisition will increase the value of CLAR’s logistics assets under management (AUM) in the US by 35.3% to approximately $587.5 million. With this acquisition, CLAR’s logistics footprint in the US will expand to 20 properties across four cities with a total GFA of approximately 5.1 million sq ft.
Aside from the latest property 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, says, “DHL Indianapolis Logistics Center is a strategic fit with our existing portfolio… This is CLAR’s first sale and leaseback acquisition in the US, and including this Class A logistics property, modern logistics assets will account for 42.3% of our US logistics assets under management. With the long lease in place, this property will further enhance CLAR’s resilient income stream, and we expect the two new properties to contribute positively to our long-term returns.”