Clar bulks up with S$1.4 billion Singapore, Japan buys funded by S$900 million unit issue

[SINGAPORE] CapitaLand Ascendas Reit (Clar) is continuing its portfolio refresh with S$1.4 billion worth of acquisitions across Singapore and Japan, it said on Tuesday (Mar 24).

In Singapore, it is set to buy all of 25 Loyang Crescent – a cluster of ramp-up logistics and industrial buildings – for S$504.2 million. It has also bought a 50 per cent interest in Ascent, a premium business space property, for S$245 million. A global sovereign wealth fund will acquire the remainder of Ascent.

The real estate investment trust (Reit) is also entering Japan through the acquisition of a 49 per cent interest in a Tier 3 hyperscale data centre in Greater Osaka for S$620.7 million. The remaining interest in the data centre is held by a fund managed by Mitsui & Co Realty Management.

Clar said it is also launching a preferential offering and private placement to raise S$900 million. Nearly S$500 million will be used to finance the Japan and Singapore acquisitions, with the rest used to fund previously announced asset buys.

William Tay, chief executive officer and executive director of Clar’s manager, said: “These assets strengthen our presence in Singapore... while expanding into developed markets such as Japan with healthy market fundamentals and demand drivers.”

Clar’s new expansion into Japan reflects its focus on scaling and diversifying its global data centre portfolio across key established digital hubs with strong demand drivers and connectivity, he added.

Accretive acquisitions

The three asset purchases are also expected to be cumulatively and individually accretive on a pro forma basis, it added. The distribution per unit accretion is expected to be around S$0.00318, or 2.1 per cent, if the acquisitions were completed on Jan 1, 2025.

With the buys, Clar’s Singapore assets under management (AUM) value will increase to about S$13.2 billion and make up about two-thirds of its total portfolio AUM. The occupancy and weighted average lease expiry of Clar’s portfolio will also increase to 91.5 per cent and 4.3 years, respectively.

The 40.5 megawatt Japan hyperscale data centre has the potential for a 13.3 per cent capacity expansion, added Clar.

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Its purchase is set to be completed in the second quarter, while the Loyang purchase are set to be completed in the third quarter of this year.

Real estate services company CBRE brokered the Loyang deal.

Loh Lee Fen, CBRE’s head of Singapore industrial capital markets, said: “Singapore continues to cement its position as one of the region’s most reliable investment destinations.

“The softening of interest rates to their lowest levels since 2022 has further strengthened buying momentum. Well-stabilised assets with good tenant covenant and long leases are popular given the resilience and clarity of income they provide in today’s environment.”

Unit issue and advanced distribution

As part of the broader equity fundraising, Clar will have a non-renounceable preferential offering to eligible unitholders to raise about S$300 million and a private placement for institutional, accredited and other investors to raise about S$600 million.

The new preferential offering units will have an issue price ranging between S$2.35 and S$2.40 each. Entitlements for this preferential offering will be determined based on existing units held as at 5 pm on Apr 1.

Meanwhile, the private placement units will be issued at a price ranging from S$2.406 to S$2.45.

To ensure fairness to existing unitholders, the manager is proposing an advanced distribution, expected to be S$0.0375 per existing unit, before the new private placement units are issued. The advanced distribution covers the period from Jan 1 to the day immediately prior to the issuance of the private placement units, which is expected to be on or around Apr 2.

This proposed payout comprises a taxable income component of S$0.03116, a capital distribution component of S$0.0059, and a tax-exempt income component of S$0.00044.

Unitholders whose accounts are credited with existing units at 5 pm on Apr 1 will be eligible for the payout, which is expected to be distributed on or around Apr 30.