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CapitaLand Ascendas REIT (CLAR) has proposed to acquire three properties located in Singapore for a total cost of $565.8 million, which includes the estimated upfront land and enhancement premiums of $33.2 million. An independent valuation of the portfolio indicates a market value of approximately $589 million. Upon the completion of the acquisition in the first quarter of 2026, the value of CLAR’s Singapore portfolio will increase to approximately $12.3 billion, accounting for 68% of the REIT’s total assets under management (AUM).

The portfolio 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. The properties are currently fully occupied by 19 tenants, with a long weighted average lease expiry (WALE) of approximately 5.5 years. These tenants are publicly listed companies and multinational corporations in various industries such as electronics and semiconductors, transportation and logistics, precision engineering, and pharmaceuticals and life sciences.

With most of the leases containing rental escalation clauses ranging from 1% to 5% per annum, CLAR expects rental growth opportunities. The current rental rates are around 15% below market rates, according to the REIT manager’s announcement on October 7th.

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According to CLAR, the proposed acquisition is expected to increase the REIT’s distribution per unit (DPU) and will have a first-year net property yield of 6.4% pre-transaction costs and 6.1% post-transaction costs. If the acquisitions are completed on January 1st, 2024, CLAR’s DPU is anticipated to improve by approximately 0.124 cents or 0.8% for the FY2024 on a pro forma basis.

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

“These accretive acquisitions build on our recent purchases of a Tier III colocation data centre and a premium business space property completed in August,” says William Tay, Executive Director and CEO of CLAR’s manager. He adds that the strong lease profile of the properties is a rare and attractive opportunity in Singapore’s industrial property market, and will enhance the resilience of CLAR’s income stream.

This article first appeared on AsiaOne.