Clar Expands Us Logistics Portfolio First Sale And Leaseback Acquisition 1503 Million
CapitaLand Ascendas REIT (CLAR) has announced its intention to purchase the DHL Indianapolis Logistics Center, a high-quality logistics property, from Exel Inc. d/b/a DHL Supply Chain (DHL USA) for $150.3 million. This acquisition represents a 4.1% discount from the independent market valuation of the property as of January 1, 2025.
After factoring in transaction-related fees and expenses of $1.7 million, as well as a $1.5 million acquisition fee to be 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 existing debt facilities, according to a press release dated December 17.
The DHL USA will enter into a long-term leaseback agreement for the entire gross floor area (GFA) of the property with options to renew for an additional two five-year terms, which will run until December 2035. This long lease term, along with a built-in rent escalation of 3.5% per annum, will provide income stability and enhance the resilience of CLAR’s portfolio, according to the manager. The property is currently fully occupied, with a weighted average lease expiry (WALE) of approximately 11 years. This will increase the US portfolio WALE from 4.2 to 4.7 years on a pro forma basis.
The first-year net property income (NPI) yield for the proposed acquisition is estimated to be approximately 7.6% before transaction costs and 7.4% after transaction costs. The pro forma impact on the distribution per unit (DPU) for the financial year ending December 31, 2023, is expected to be an increase of approximately 0.019 Singapore cents, or a DPU accretion of 0.1%, assuming the acquisition is completed on January 1, 2023.
The property, which is expected to be completed in 2022, is located in Whiteland, a submarket in southeastern Indianapolis, Indiana. It is a fully air-conditioned, single-story logistics building with a GFA of 979,649 square feet. The acquisition will increase CLAR’s logistics assets under management (AUM) in the US by 35.3%, bringing it to a total of $587.5 million. With this purchase, CLAR’s logistics footprint in the US will expand to 20 properties across four cities, with a total GFA of approximately 5.1 million square feet.
In addition to this 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, stated, “The DHL Indianapolis Logistics Center is a perfect fit for our existing portfolio… This is CLAR’s first sale and leaseback acquisition in the US, and with the addition of 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.”
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