CapitaLand Ascendas REIT grows business park portfolio

Insights

REITs

By Beansprout • 22 May 2023 • 0 min read

CapitaLand Ascendas REIT announced the acquisition of Seagate’s Singapore headquarters, the Shugart, for S$218 million.

CapitaLand-Ascendas-REIT-acquires-Shugart

In this article

0 min read

🕵️‍♂️ What happened?

  • CapitaLand Ascendas REIT announced the acquisition of Seagate’s Singapore headquarters, the Shugart, for S$218 million. 
CapitaLand Ascendas REIT share price
Source: SGX as of 19 May 2023

 

🔧 What you need to know about CapitaLand Ascendas REIT's latest acquisition

#1 - Acquisition provides income stability

The Shugart is a modern specification asset located in the prime one-north cluster in Singapore, and is used mainly for R&D purposes. 

Seagate will lease it back from CapitaLand Ascendas REIT for 10 years, with an option to extend it by another 10 years. 

In addition, CapitaLand Ascendas REIT would receive an annual rent increase of 2.5%.

image.png
Source: CapitaLand Ascendas REIT

 

#2 - Acquisition will strengthen CapitaLand Ascendas REIT's portfolio

The acquisition will strengthen CapitaLand Ascendas REIT’s position in the business park segment. 

Following the completion of the transaction in 2Q23, business parks will represent about 49% of the REIT’s portfolio. 

image.png
Source: CapitaLand Ascendas REIT

#3 - Acquisition is expected to be accretive in distribution per unit

The acquisition will funded by an equity fund raising (EFR) of S$500 million, and is estimated to be accretive to distribution per unit (DPU) by 0.7%. 

Another S$160 million from the EFR proceeds will be used for debt repayment, with CapitaLand Ascendas REIT’s gearing level expected to fall to 37.6% from 38.2% currently. 

🧐 What to look out ahead for CapitaLand Ascendas REIT?

CapitaLand Ascendas REIT is in performing advanced due diligence on a potential acquisition within the logistics and data centre segments in a key gateway city in Europe. 

This could be further accretive to its distributions per unit. 

🧮 What's the valuation of CapitaLand Ascendas REIT?

  • CapitaLand Ascendas REIT currently offers a dividend yield of 5.0%, above the 10-year Singapore government bond yield.
  • The consensus target price for CapitaLand Ascendas REIT is $3.14. This is 12% above CapitaLand Ascendas REIT's share price of S$2.80 as of 19 May 2023.  
CapitaLand Ascendas REIT target price
Source: SGX as of 19 May 2023

 

Learn more about what we would consider before buying a Singapore REIT in our step-by-step guide to REIT investing.

Join Beansprout's telegram group for the latest updates on Singapore stocks, bonds, REITs and ETFs. 

Disclaimer: The information provided on is meant purely for informational and investor education purposes, and should not be relied upon as financial or investment advice, or advice on corporate finance. No information is presented with the intention to induce any person to buy, sell, or hold a particular investment product or class of investment products.

Read also

Gain financial insights in minutes

Subscribe to our free weekly newsletter for more insights to grow your wealth

chatbubble Comments

0 comments