CapitaLand Ascendas REIT (CLAR) is proposing to acquire three properties in Singapore for a total consideration of $565.8 million, which includes the estimated upfront land and enhancement premiums of $33.2 million. The aggregate market value of the portfolio is independently valued at around $589 million.

The portfolio, which consists of a four-storey ramp-up logistics property at 2 Pioneer Sector 1; Tuas Connection, a light industrial property on Tuas Loop comprising 15 double-storey industrial units; and an eight-storey high-specifications industrial property at 9 Kallang Sector, will increase the value of CLAR’s Singapore portfolio to about $12.3 billion. Upon the completion of the acquisition around 1Q2026, CLAR’s Singapore portfolio will account for 68% of its total assets under management (AUM).

The target properties are fully occupied by 19 tenants with a long weighted average lease expiry (WALE) of about 5.5 years. These tenants are publicly listed companies and multinational corporations in industries such as electronics & semiconductors, transportation & logistics, precision engineering as well as pharmaceuticals & life sciences. CLAR also expects rental growth opportunities with rental escalations in most of the leases ranging from 1% to 5% per annum. In-place rents are about 15% below market rents, says the REIT manager in its Oct 7 announcement.

Read also: CapitaLand Ascendas REIT to sell five industrial and logistics properties for $329 mil

The proposed acquisition is expected to be accretive to CLAR’s distribution per unit (DPU). The expected first year net property yield is around 6.4% pre-transaction costs and 6.1% post-transaction costs.

Should the acquisitions be completed on Jan 1, 2024, CLAR’s DPU is expected to improve by around 0.124 cents or 0.8% for the FY2024 ended Dec 31, 2024 on a pro forma basis.

In line with the acquisitions, CLAR’s trustee has entered into conditional put and call option agreements with DBS Trustee Limited for 2 Pioneer Sector 1 and Tuas Connection. DBS Trustee is the trustee of Supreme REIT.

CLAR’s trustee has also entered into a share sale agreement with Supreme REIT and Clay SG Holdings I Pte. Ltd to acquire 100% of the issued share capital of Waterbay Investment Pte. Ltd., the registered proprietor of the property located at 9 Kallang Sector.

“These accretive acquisitions build on our recent acquisitions of a Tier III colocation data centre and a premium business space property which were completed in August,” says William Tay, executive director and CEO of CLAR’s manager.

He adds that the properties’ “strong lease profile” is a “rare and attractive opportunity” in Singapore’s industrial property market and will “enhance the resilience of CLAR’s income stream.”

Read also: CLAR expands logistics portfolio in UK for $350.1 mil

This story first appeared on The Edge Singapore.