CapitaLand Ascendas REIT (CLAR) has announced its plans to acquire DHL Indianapolis Logistics Center, a top-tier logistics facility, from Exel Inc. d/b/a DHL Supply Chain (DHL USA) for $150.3 million. This represents a 4.1% discount to the independent market valuation of the property as of Jan 1, 2025. After adding transaction-related fees and expenses of $1.7 million, as well as a $1.5 million acquisition fee paid to the manager, the total acquisition cost will amount to $153.4 million.
The manager intends to finance the acquisition through a combination of internal resources, divestment proceeds, and/or existing debt facilities, according to a press release issued on Dec 17.
Under the terms of the deal, DHL USA will enter into a long-term leaseback of the entire gross floor area (GFA) of the property until December 2035, with options to renew for two additional five-year terms. The lease term of approximately 11 years, with a built-in rent escalation of 3.5% per annum, will provide income stability and strengthen the resilience of CLAR’s portfolio, according to the manager.
The fully occupied property, with a weighted average lease to expiry (WALE) of approximately 11 years, 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% pre-transaction costs and 7.4% post-transaction costs. It is expected to have a positive impact on the distribution per unit (DPU) for the financial year ended Dec 31, 2023, with an improvement of approximately 0.019 Singapore cents, or a DPU accretion of 0.1%, assuming the proposed acquisition is completed on Jan 1, 2023.
Located in Whiteland, a submarket in southeast Indianapolis, Indiana, the property was completed in 2022. It is a fully air-conditioned, single-storey logistics building with a GFA of 979,649 sq ft.
The acquisition will expand CLAR’s logistics assets under management (AUM) in the US by 35.3%, to a total of $587.5 million. With this addition, CLAR’s logistics footprint in the US will now cover 20 properties across four cities, with a total GFA of approximately 5.1 million sq ft. In addition to this latest property in Indianapolis, CLAR’s logistics assets in the US are located in Kansas City, Chicago, and Charleston.
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William Tay, executive director and CEO of the manager, commented, “DHL Indianapolis Logistics Center is a valuable addition to 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 make up 42.3% of our US logistics AUM. With the long-term lease in place, this property will further enhance CLAR’s resilient income stream, and we expect these two new properties to contribute positively to our long-term returns.”