CapitaLand Ascendas Real Estate Investment Trust (CLAR) has announced its plan to acquire the DHL Indianapolis Logistics Center for $150.3 million. The Class A logistics property is being sold by Exel Inc. d/b/a DHL Supply Chain (DHL USA) at a 4.1% discount to the independent market valuation as of January 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 be $153.4 million.
The manager intends to use a combination of internal resources, divestment proceeds, and/or existing debt facilities to finance the acquisition, according to a press release dated December 17. As part of the deal, DHL USA will enter into a long-term leaseback agreement for 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.
Fully occupied, the property has a weighted average lease to expiry (WALE) of approximately 11 years, which 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 December 31, 2023, is expected to see an improvement of approximately 0.019 Singapore cents, or a DPU accretion of 0.1%, assuming the proposed acquisition was completed on January 1, 2023.
The property, which will be completed in 2022, is located in Whiteland, a submarket in southeast Indianapolis, Indiana. It is a fully air-conditioned, single-storey logistics building with a GFA of 979,649 square feet. Upon completion, 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 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. The other logistics assets in the US are located in Kansas City, Chicago, and Charleston.
William Tay, Executive Director and CEO of the manager, states, “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.” He adds that with the long lease in place, this property will further enhance CLAR’s resilient income stream and contribute positively to their long-term returns.
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