Ascendas India Trust to invest in two additional industrial facilities at Mahindra World City, Chennai (Casa Grande – Phase 2)
14 July 2022, 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 the Casa Grande Group (the Transaction) to acquire two industrial assets (Casa Grande – Phase 2 or the Phase 2 Project) located at Mahindra World City, Chennai. a-iTrust will also provide funding for the development of the Phase 2 Project as part of the forward purchase arrangement.
This is in addition to the earlier forward purchase transaction announced on 5 March 2021 for a 0.42 million square feet (sqft) fully leased industrial facility (Casa Grande – Phase 1) within the same micro-market. The acquisition of Casa Grande – Phase 1 was completed on 27 May 2022.
About the Phase 2 Project
The Phase 2 Project consists of two industrial facilities with net leasable area totaling 0.31 million sqft. a-iTrust proposes to fund the development of the Phase 2 Project and subsequently acquire both facilities. The construction of Casa Grande – Phase 2 is expected to be completed by the second half of 2023 and acquisition will be completed after a stabilisation period of 12 months for leasing.
Mr Sanjeev Dasgupta, Chief Executive Officer of the Trustee-Manager, said:
"The full leasing of Casa Grande – Phase 1 validates our assessment of the demand for industrial assets in this location. The proposed Casa Grande – Phase 2 acquisition provides an opportunity to increase exposure to the industrial sector and expand our presence in Mahindra World City, a prime industrial corridor in Chennai."
Details of the Transaction
Pursuant to the deal structure, a-iTrust shall provide funding towards the development of the Phase 2 Project. Upon completion of the Phase 2 Project and fulfilment of other key conditions, a-iTrust shall acquire all of the issued share capital of Chengalpattu Warehousing Parks Private Limited (CWPPL), the entity developing the Phase 2 Project.
Rationale for the Transaction
- Diversification into Industrial Space
The Transaction offers further diversification for a-iTrust into the industrial asset class and fits the Trustee-Manager’s investment strategy to invest in quality logistics and industrial assets.
- Established Location
Mahindra World City is an established industrial micro-market occupied by leading blue-chip companies including BMW, BASF, Fujitec, NCR Corporation and B. Braun. The Phase 2 Project is in close proximity to Casa Grande – Phase 1, which is fully leased to a leading electronics contract manufacturer.
- 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 2021 distribution per unit (DPU) is expected to be an accretion of 0.01 Singapore cents1.
Effect on Portfolio
As a result of the acquisition of Casa Grande – Phase 2, a-iTrust’s portfolio size (inclusive of committed investment pipeline) will increase by 1.2% from approximately 25.0 million sqft2 to approximately 25.3 million sqft.
Notes:
1 The pro-forma impact on FY 2021 DPU is shown for illustrative purposes only and is calculated post the retention of 10% of income available for distribution and is based on the following assumptions: a) a-iTrust had completed the acquisition on 1 January 2021 and held the interest in the Phase 2 Project through to 31 December 2021; and b) the Transaction had been funded using 45% debt and 55% equity.
2 Includes the proposed acquisitions of: (i) one building in Aurum Q Parc 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) Arshiya warehouse in Khurja as announced on 13 March 2020, (vi) IT Park at Hebbal as announced on 29 March 2021, (vii) Phase 1 of the data centre campus in Navi Mumbai as announced on 5 July 2021 and (viii) the development pipeline in existing projects.