The acquisitions of a data center and a premium office building, both fully leased, enhance CLAR’s exposure to the technology sector and strengthen its revenue resilience.
CapitaLand Ascendas REIT (CLAR), the largest industrial real estate investment trust in Singapore, has announced the acquisition of two strategic properties in the country for approximately SGD 700.2 million. The transaction includes a tier III data center at 9 Tai Seng Drive and a premium office building at 5 Science Park Drive.
With these acquisitions, CLAR raises the total value of its assets under management in Singapore to SGD 11.7 billion, representing 67% of its global portfolio, which reaches SGD 17.6 billion. Both properties are fully leased to established companies in the digital, financial, and e-commerce sectors, reinforcing the REIT’s income stability.
“Strengthening our portfolio in Singapore is key to our strategy, especially in high-growth sectors like technology,” stated William Tay, CEO of the REIT’s management company. “These acquisitions will positively contribute to long-term returns, in addition to providing organic growth opportunities,” he added.
Acquisition Details
9 Tai Seng Drive is a six-story, carrier-neutral data center with BCA-IMDA Green Mark Platinum certification. Completed in 2019 and with a renewed lease until 2055, its acquisition will increase CLAR’s data center assets by 32.8%, reaching SGD 1.9 billion.
Located in a strategic area of the Tai Seng industrial district, the building features connections to Tier-1 network providers and the Singapore Internet Exchange, making it a key point for cloud operators and digital companies. The property is 100% leased, with a weighted average lease duration of 4.4 years, and it is expected to deliver a net yield of 7.1% after costs.
5 Science Park Drive, on the other hand, is part of the “Geneo” innovation and life sciences cluster in Singapore Science Park 1. This six-story building is fully leased to Shopee, the e-commerce platform of Sea Group, which uses it as its regional headquarters. It boasts an excellent location, direct public transport connections, and a lease duration of 56 years. The expected net yield is 5.7% after costs.
Organic Growth and Returns for Investors
Both assets present clear growth opportunities. For 9 Tai Seng Drive, current placement agreement prices are 30% below the market average, allowing for upward revisions in upcoming renewals. Additionally, there is potential to increase the building’s IT capacity.
As for 5 Science Park Drive, a rental upward revision is anticipated when the current lease ends in 2026, as the current price is 15% below the market value in the one-north and SSP 1 area.
The acquisitions are also expected to benefit CLAR investors: a pro forma improvement in distribution per unit (DPU) of 1.36% is anticipated. This translates to an increase of SGD 0.206 per unit.
Financing and Approval
The total acquisition cost will amount to SGD 724.6 million, including management fees and legal expenses. The REIT will finance this operation through a combination of issuing new units and debt. The acquisitions are subject to unitholder approval, so an extraordinary general meeting will be convened.
With this transaction, CLAR will have a total of 232 properties in its global portfolio, distributed across Singapore (98), Australia (34), the United States (50), and the United Kingdom/Europe (50).
Source: investor.capitaland-ascendasreit