SINGAPORE, December 18, 2024 - CapitaLand Ascendas REIT (CLAR) is set to significantly expand its presence in the United States logistics market with the acquisition of the DHL Indianapolis Logistics Center for S$150.3 million (US$115.8 million). This marks CLAR’s first sale-and-leaseback transaction in the US, strategically enhancing its portfolio with a modern, fully-leased facility.
The acquisition of the Class A logistics property from DHL Supply Chain (USA) is a key move by CLAR to bolster its US logistics assets. The property, located in Whiteland, Indiana, is a modern distribution center, completed in 2022 and fully leased back to DHL under a long-term agreement.
This move is part of CLAR's broader strategy to strengthen its logistics portfolio. Mr. William Tay, CEO of the Manager for CLAR, stated that the new property will increase CLAR's US logistics portfolio value by 35.3% to S$587.5 million, encompassing 5.1 million square feet of gross floor area. Modern logistics assets will now comprise 42.3% of their US portfolio, significantly improving the overall quality of CLAR's holdings.
The property’s long-term lease with DHL, extending to December 2035 with options for two additional five-year terms, provides income stability for CLAR. The lease includes an annual rent escalation of 3.5%, further enhancing the resilience of the REIT’s income stream. This long lease also increases CLAR’s US portfolio WALE from 4.2 years to 4.7 years on a pro forma basis.
The DHL Indianapolis Logistics Center is a high-specification, single-story facility with a gross floor area of 979,649 sq ft. Its features include a 12.2-meter clear height, advanced dock equipment, a cross-dock configuration, and wide truck courts. Its location is ideal, positioned less than 45 kilometers from downtown Indianapolis and the airport along the Interstate 65 corridor, a major north-south thoroughfare, it benefits from access to three other major interstates.
Indianapolis is considered one of the top 15 logistics markets in the US, underpinned by its central geographic location and strong transportation infrastructure. The city’s strategic position is further reinforced by the presence of the world's second-largest FedEx air hub. Total warehouse and storage labor employment in Indianapolis is expected to grow by 6.1% by 2034. This thriving logistics market contributes to CLAR’s strategic position in the Midwest region.
The proposed acquisition is projected to be accretive to CLAR's Distribution per Unit (DPU). The first-year net property income (NPI) yield is approximately 7.6% pre-transaction costs and 7.4% post-transaction costs. The pro forma impact on the DPU for the financial year ended 31 December 2023 is expected to be an improvement of approximately 0.019 Singapore cents or a DPU accretion of 0.1%.
The purchase consideration is at a 4.1% discount to the property's independent market valuation of S$156.8 million. The total acquisition cost is S$153.4 million, which will be funded through internal resources and debt facilities. Completion of the acquisition is anticipated in the first quarter of 2025, subject to standard closing conditions.
This acquisition is another significant step for CapitaLand Ascendas REIT, solidifying their logistics presence in the US and highlighting the strategic value of a modern, well-located logistics property with a strong, long-term tenant.
