CLAR expands US logistics portfolio with first sale and leaseback acquisition for $150.3 million
William Tay, executive head and chief executive officer of the manager, states: “DHL Indianapolis Logistics Center is a strategic fit with our existing account … This is CLAR’s first sale and leaseback procurement in the US and including this Class A logistics estate, contemporary logistics properties will represent 42.3% of our United States logistics possessions under control. With the lengthy lease in place, this real estate is going to further enhance CLAR’s resistant revenue stream, and we expect both brand-new real estates to contribute efficiently to our long-term returns.”
Besides this latest property in Indianapolis, CLAR’s logistics properties in the United States are located in Kansas City, Chicago and Charleston.
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.
After including transaction-related costs and expenses of $1.7 million, along with a $1.5 million procurement fee paid to the supervisor, the complete purchase cost are going to be $153.4 million.
The manager plans to fund the overall acquisition fee via a combination of inner resources, divestment proceeds and/or existing financial debt centers, according to a Dec 17 press release.
The first-year net property income (NPI) revenue of the recommended purchase is around 7.6% pre-transaction expenses and 7.4% post-transaction expenses. The pro forma effect on the distribution per unit (DPU) for the financial year concluded Dec 31, 2023 is expected to be an improvement of approximately 0.019 Singapore cents, or a DPU increase of 0.1%, presuming the recommended purchase was completed on Jan 1, 2023.
Following the procurement, DHL U.S.A. will participate in an extended leaseback till December 2035 of the building’s overall gross floor area (GFA) with options to extend for two added five-year terms.
The purchase will certainly boost the value of CLAR’s logistics assets under management (AUM) in the United States by 35.3% to some $587.5 million. With this acquisition, CLAR’s logistics footprint in the USA will broaden to 20 properties throughout four towns with an overall GFA of roughly 5.1 million sq ft.
CapitaLand Ascendas REIT (CLAR) has already offered to acquire DHL Indianapolis Logistics Hub, a Class A logistics real estate, 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 property as at Jan 1, 2025.
The long lease term of around 11 years with integrated rental fee rise of 3.5% per year will provide income stability and strengthen the resilience of CLAR’s selection, claims the supervisor.
The completely taken up building, with its weighted average lease to expiry (WALE) of around 11 years, will certainly boost CLAR’s United States portfolio WALE from 4.2 years to 4.7 years on a pro forma basis.
