CapitaLand India Trust to invest in a forward purchase of a 1.0 million sq ft IT Park at Outer Ring Road, Bangalore, India
Singapore, 18 January 2023 – CapitaLand India Trust Management Pte. Ltd., the Trustee-Manager of CapitaLand India Trust (“CLINT”), is pleased to announce that it has entered into a forward purchase agreement to acquire a 1.0 million sq ft IT Park located at Outer Ring Road, Bangalore, India (the “Transaction”). CLINT will provide funding for the development of the project as part of the forward purchase arrangement.
About the Project
The project comprises two buildings with an aggregate net leasable area of approximately 1.5 million sq ft (the “Project”). CLINT proposes to fund the development of the Project and subsequently acquire a net leasable area of 1.0 million sq ft (“Building 1”). The remaining net leasable area of approximately 0.5 million sq ft (“Building 2”)1 will be retained by the landowners. The landowners have appointed CapitaLand Services (India) Private Limited (“CSIPL”)2 to oversee the design, development and leasing of the Project.
During the construction period, CLINT’s investment in the construction of the Project will be through debt and internal resources. The forward purchase acquisition will be executed after completion of the construction of Building 1 and is subject to the receipt of the occupancy certificate for Building 1 and the fulfillment of other key conditions.
Mr. Sanjeev Dasgupta, Chief Executive Officer of the Trustee-Manager said, “The proposed acquisition will provide an opportunity to establish our presence in Outer Ring Road, India’s largest office micro-market, which has demonstrated resilient performance during the COVID-19 pandemic. With this acquisition, we will be able to offer our tenants even more office space options across the key markets in Bangalore.”
Details of the Transaction
Pursuant to the deal structure, CLINT will provide funding towards the development of the Project linked to construction milestones over the estimated timeline from 1Q 2023 to 4Q 2025. Over the next 12 months, the funding will be financed through internal resources and the Trustee-Manager expects to utilise debt only from 1H 2024. Upon completion of construction of Building 1 and fulfilment of other key conditions, CLINT will acquire 100% of the issued share capital of Ebisu Techpark Private Limited, the entity which owns and will develop Building 1. The total purchase price for Building 1 is expected to be INR12,261 million / S$201.0 million3, which includes the funding for the Project.
Rationale for the Transaction
- Established Location
Outer Ring Road is Bangalore’s largest office micro-market owing to its access to the international airport and proximity to the city centre. The micro-market represents 44%4 of Bangalore’s absorption and has low vacancy. Outer Ring Road is one of the preferred locations for multinational tenants including Google, Amazon, Goldman Sachs and JP Morgan. The Project is adjacent to an upcoming metro station and is surrounded by established business parks, hospitality, retail and healthcare developments.
- Complements CLINT’s Existing Portfolio in Bangalore
Upon completion, the Transaction will increase CLINT’s area under operation in Bangalore from 6.9 million sq ft5 to 7.9 million sq ft. The Project complements CLINT’s existing portfolio in Whitefield (International Tech Park Bangalore) and Hebbal (Gardencity) to offer tenants options across micro-markets and leverages its deep market knowledge and occupier relationships in Bangalore.
- Improved Earnings and Distributions for Unitholders
The Trustee-Manager believes that the Transaction will improve the earnings and distributions for Unitholders.
Effect on Portfolio
As a result of the acquisition of Building 1, CLINT’s portfolio size (inclusive of committed investment pipeline) will increase by 3.6% from approximately 28.0 million sq ft6 to approximately 29.0 million sq ft.
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1. CLINT’s funding towards development of Building 2 will be repaid by the landowners at the time of acquisition of Building 1.
2. CSIPL is the property manager for CLINT’s existing portfolio.
3. Exchange rate of S$1 = INR61.
4. From 2017 – 2021; Source: CBRE.
5. Includes International Tech Park Bangalore and Gardencity (IT park at Hebbal).
6. Includes the proposed acquisitions of: (i) Building Q2 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, (viii) Casa Grande – Phase 2 as announced on 14 July 2022, (ix) Data centre campus in Chennai as announced on 13 December 2022, (x) International Tech Park Pune - Hinjawadi as announced on 29 December 2022 (subject to unitholders’ approval at an EGM) and (xi) the development pipeline in existing projects.