CLAR to develop logistics property in the US with stabilised NPI yield of 7.2%, and DPU accretion of 0.3%

On Nov 15, CapitaLand Ascendas REIT A17u's (CLAR) manager announced the acquisition of a parcel of land at 178 & 179 Quality Drive in the city of Summerville, a submarket of Charleston, South Carolina, in the US. The land will be developed into a new logistics property to be known as Summerville Logistics Center at an estimated total investment cost of approximately US$70.5 million, equivlent to $94.8 million. 

William Tay, CEO of CLAR's manager says: “This development of a prime best-in-class green-certified logistics distribution property aligns with our strategy to expand our logistics portfolio to capture the growth potential in this sector. CLAR’s logistics assets under management in the US will increase by 27.9% to $434.1 million. Marking our first development in the US, this opportunity will also enhance the quality of our portfolio with a new asset which generates long-term value for unitholders. We will continue to identify opportunities to scale up in the US, riding on on/reshoring trends, as well as targeting key growth cities and established industrial markets to serve the growing demand for quality logistics assets.”

The stabilised NPI yield for the first year is approximately 7.6% pre-transaction costs and 7.2% post-transaction costs. CLAR will finance the Total Investment Cost through its internal resources and/or existing debt facilities. The pro forma impact on the distribution per unit (DPU) for FY2023 is expected to be an improvement of approximately 0.041 cents or a DPU accretion of 0.3%, assuming the acquisition was completed on Jan 1, 2023.

In 1HFY2024, CLAR announced a DPU of 7.524 cents (-2.5% y-o-y) translating into a yield of 5.74% based on the closing price on Nov 14.