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Ascendas India Trust to invest up to 9.3b rupees to build, acquire 2 Navi Mumbai buildings

ASCENDAS India Trust plans to provide construction funding and to buy two buildings in the township of Navi Mumbai, India, for a total debt-and-equity investment of up to about 9.3 billion Indian rupees (S$186 million), the trust manager announced on Monday. (see amendment note)

Under the deal, the Indian business space property trust will subscribe to 5.0 billion rupees of 30-year secured debentures issued by the co-developer of two out of the four buildings in the Aurum IT Sez development in the Aurum Platz IT Park. Proceeds from the debentures will be used for construction funding purposes. The coupon on the debentures was not disclosed.

The trust will then buy 100 per cent of the shares of the co-developer, which comprises two vehicles owned by privately held Aurum Platz, on a top-up basis for up to 9.3 billion rupees in total based on certain leasing milestones or 24 months from the actual completion date, whichever is earlier. The purchase prices will be determined by a formula that accounts for factors such as rent, occupancy and capitalisation rates. (see amendment note)

The two buildings that the trust is acquiring will have a "super built up area" of 1.4 million square feet (sq ft), which means that rent is payable on the sum of the floor area within the walls, including the area occupied by the walls and common areas such as lobbies, lift shafts, toilets and staircases. Completion of construction is expected by the second half of 2018 for the first building and by early 2020 for the second building. The two buildings will be acquired separately.

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Ascendas India Trust will also have right of first refusal on the remaining two buildings in the Aurum IT Sez development. Those two remaining buildings have a super built up area of about 1.5 million sq ft.

The target properties are off the Thane-Belapur Expressway, a key corridor for information technology businesses in Mumbai, Ascendas India Trust said. A new international airport in Navi Mumbai is scheduled for completion in 2019, which will enhance the importance of the location, the trust said.

With the acquisition, Mumbai will account for 16 per cent of the trust's enlarged portfolio by super built up area, up from the current 7 per cent share. The new properties would have generated S$9.4 million of net profit for the financial year ended March 31, 2018 if acquired  that year, and distribution per unit would have increased to 6.21 Singapore cents from 6.10 Singapore cents, the trust said. Net asset value per unit would have increased to S$0.91 from the actual S$0.90 if the acquisition had been completed by March 31.

Amendment note:
An earlier version of the story said that the total investment in the project was up to 14.3 billion Indian rupees. The total investment is actually up to 9.3 billion rupees.