CLAR expands US logistics portfolio with first sale and leaseback acquisition for $150.3 million
The lengthy lease term of approximately 11 years with built-in rental fee acceleration of 3.5% per annum will offer income security and enhance the durability of CLAR’s portfolio, claims the manager.
The manager intends to finance the total procurement charge through a combination of inside sources, divestment proceeds and/or existing debt facilities, according to a Dec 17 news release.
Finished in 2022, the property rises in Whiteland, a submarket in southeast Indianapolis, Indiana. The building is a completely air-conditioned, single-storey logistics building with a GFA of 979,649 sq ft.
William Tay, executive director and CEO of the manager, states: “DHL Indianapolis Logistics Center is a strategic fit with our existing profile … This is CLAR’s primary sale and leaseback purchase in the US and including this Class A logistics estate, contemporary logistics properties will account for 42.3% of our United States logistics properties under administration. With the extensive contract in place, this property is going to better improve CLAR’s resistant earnings stream, and we anticipate the two new properties to contribute positively to our extended returns.”
Following the acquisition, DHL U.S.A. will become part of an extended leaseback till December 2035 of the real estate’s whole gross floor area (GFA) with possibilities to continue for 2 additional five-year terms.
After adding transaction-related fees and expenses of $1.7 million, along with a $1.5 million procurement cost settled to the supervisor, the total procurement cost will most likely be $153.4 million.
The first-year net property income (NPI) return of the suggested procurement is about 7.6% pre-transaction costs and 7.4% post-transaction expenses. The pro forma influence on the distribution per unit (DPU) for the financial year ended Dec 31, 2023 is anticipated to be an improvement of roughly 0.019 Singapore cents, or a DPU rise of 0.1%, presuming the recommended purchase was finished on Jan 1, 2023.
The procurement will increase the value of CLAR’s logistics assets under management (AUM) in the United States by 35.3% to some $587.5 million. With this purchase, CLAR’s logistics footprint in the USA will definitely broaden to 20 properties across 4 metros with an overall GFA of about 5.1 million sq ft.
Besides this latest property in Indianapolis, CLAR’s logistics properties in the US rise in Kansas City, Chicago and Charleston.
The fully taken up property, with its weighted average lease to expiry (WALE) of approximately 11 years, will certainly increase CLAR’s United States profile WALE from 4.2 years to 4.7 years on a pro forma basis.
CapitaLand Ascendas REIT (CLAR) has already submitted to get DHL Indianapolis Logistics Center, a Class A logistics building, from Exel Inc. d/b/a DHL Supply Chain (DHL United States) for $150.3 million. This is a 4.1% discount rate to the independent market assessment of the estate as at Jan 1, 2025.
