Ascendas India Trust to invest in forward purchase acquisition of its first industrial facility
Ascendas India Trust to invest in forward purchase acquisition of its first industrial facility at Mahindra World City, Chennai
5 March 2021, Singapore – Ascendas Property Fund Trustee Pte. Ltd., the Trustee-Manager of Ascendas India Trust (“a-iTrust”), is pleased to announce that it has entered into a forward purchase agreement with Casa Grande Group (the “Transaction”) to acquire its first industrial facility (the “Project”) located at Mahindra World City, Chennai. a-iTrust will also provide funding for the development of the Project as part of the forward purchase arrangement.
About the Project
The Project is an industrial facility with a net leasable area of approximately 0.42 million square feet. The Project is fully pre-leased to Pegatron Technology India Private Limited, a wholly owned subsidiary of Pegatron Corporation. Pegatron Corporation is a listed Taiwanese contract electronics manufacturer. a-iTrust proposes to fund the balance development of the Project and subsequently acquire the asset.
“The proposed acquisition will add exposure to the industrial asset class and diversify our portfolio. The industrial segment has been resilient through the pandemic. The Project also offers an opportunity to have a leading manufacturer like Pegatron within our tenant portfolio and support their expansion in India.”
Mr. Sanjeev Dasgupta, Chief Executive Officer of the Trustee-Manager
Details of the Transaction
Pursuant to the deal structure, a-iTrust shall provide funding towards the development of the Project. Upon completion of the Project and fulfilment of other key conditions, a-iTrust shall purchase 100% of the shares of the entity developing the Project.
Further, a-iTrust has the option to provide additional funding to develop industrial facilities of approximately 0.37 million square feet, subject to leasing milestones and other conditions being met.
Rationale for the Transaction
Diversification into Industrial Space
The Transaction offers a diversification opportunity for a-iTrust into the industrial asset class and fits the Trustee-Manager’s investment strategy to invest in quality logistics and industrial assets.
Mahindra World City is an established industrial micro-market occupied by leading blue-chip companies including BMW, BASF, Fujitec, NCR Corporation and B. Braun.
Reduced Execution and Leasing Risks
Construction of the Project is ongoing and is expected to complete by mid-2021. The Project is fully pre-committed to Pegatron, with a 7-year lock-in period and annual escalations.
Improved Earnings and Distributions for Unitholders
The Trustee-Manager believes that the Transaction will improve the earnings and distributions for Unitholders. The pro-forma impact of the proposed acquisition on FY 2020 distribution per unit (DPU) is expected to be an accretion of 0.04 Singapore cents1.
Effect on portfolio
As a result of the acquisition of this industrial facility, a-iTrust’s committed portfolio size will increase by 1.9% from approximately 22.8 million square feet2 to approximately 23.2 million square feet.
1 The pro-forma impact on FY 2020 DPU is shown for illustrative purposes only and is calculated post retaining 10% of income available for distribution and is based on the following assumptions: a) a-iTrust had completed the acquisition on 1 January 2020 and held the interest in the Project through to 31 December 2020; and b) Transaction had been funded using 45% debt and 55% equity.
2 Includes the proposed acquisitions of: (i) two buildings in AURUM IT SEZ as announced on 14 May 2018, (ii) aVance 5 as announced on 21 May 2018, (iii) aVance A1 & A2 in aVance Business Hub 2 as announced on 31 July 2018, (iv) BlueRidge 3 as announced on 14 June 2019, (v) the 7th Arshiya warehouse in Panvel as announced on 11 July 2019, (vi) Arshiya warehouse in Khurja as announced on 13 March 2020 and (vii) the development pipeline in existing projects.