CapitaLand Ascendas REIT, one of Singapore’s largest REITs, has announced plans to acquire the DHL Indianapolis Logistics Center for $150.3 million. The property is a Class A logistics center located in Whiteland, a submarket in southeast Indianapolis, Indiana.
The acquisition is being done at a 4.1% discount to the independent market valuation of the property as of Jan 1, 2025. After taking into account transaction-related fees and expenses, along with an acquisition fee paid to the manager, the total cost of the acquisition will be $153.4 million.
The manager intends to finance the acquisition through a combination of internal resources, divestment proceeds, and existing debt facilities, according to a Dec 17 press release.
Following the acquisition, DHL USA will enter into a long-term leaseback agreement for the property’s entire gross floor area until December 2035, with options to renew for two additional five-year terms. This long lease term, with built-in rent escalation of 3.5% per annum, will provide income stability and strengthen the resilience of CLAR’s portfolio.
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% pre-transaction costs and 7.4% post-transaction costs. The pro forma impact on the distribution per unit (DPU) for the financial year ended Dec 31, 2023, is expected to be an improvement of approximately 0.019 Singapore cents, or a DPU accretion of 0.1%, assuming the proposed acquisition was completed on Jan 1, 2023.
Completed in 2022, the property is a fully air-conditioned, single-storey logistics building with a gross floor area of 979,649 sq ft.
This 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 gross floor area of approximately 5.1 million sq ft.
Besides 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, 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.”