CapitaLand Ascendas REIT expands Singapore portfolio. Worth buying at 5.7% dividend yield?

What happened?

CapitaLand Ascendas REIT (CLAR) is expanding its footprint in Singapore with a S$700 million acquisition of two fully leased properties.

This latest move signals a continued push into high-growth segments like data centres and premium business space, areas where demand has remained resilient. 

The acquisition is  expected to give a modest boost to CapitaLand Ascendas REIT's dividends. 

I take a closer look at what this means for investors and how it fits into CapitaLand Ascendas REIT's overall strategy in the video below. 

As CapitaLand Ascendas REIT's share price has recovered with the easing of trade tensions, I also look at the REIT's latest valuation and if it still remains attractive. 

CapitaLand Ascendas REIT expands Singapore portfolio

• CapitaLand Ascendas REIT is acquiring two Singapore properties, 9 Tai Seng Drive and 5 Science Park Drive (Shopee’s regional HQ) for a total of approximately S$700 million.
• Both properties are fully occupied, with long weighted average lease expiries and high-quality tenants, offering strong income visibility.

Rationale for transaction

• The acquisitions will raise CLAR’s total assets under management from S$16.9 billion to S$17.6 billion and increase its Singapore exposure to 67% of the portfolio.
• CLAR’s data centre exposure will grow from S$1.4 billion to S$1.9 billion, with 54% of this now based in Singapore.
• There is potential for rental uplift of up to 30% at 9 Tai Seng Drive due to the tight 2% vacancy rate and limited supply in the data centre market.
• 5 Science Park Drive is currently under-rented by about 15% and has a lease term of 1.5 years remaining, offering scope for repricing upon renewal.
• The acquisitions are expected to contribute positively to distributions, with a combined DPU accretion of 1.36%.
• The deal is partly funded through a private placement of 202 million new units at S$2.47 each, raising approximately S$500 million, with healthy investor interest as the placement was 4.1 times subscribed.

Private Placement to Fund acquisitions

• CapitaLand Ascendas REIT funded the acquisition partially through a private placement of 202 million new units priced at S$2.47 each, raising gross proceeds of approximately S$500 million.
• The private placement was well received by the market, with demand 4.1 times the number of units offered, indicating strong investor confidence.

What would Beansprout do?

• The acquisition strengthens CLAR’s position in Singapore by increasing its exposure to high-quality domestic assets, especially in the growing data centre segment.
• The properties are leased to reputable tenants such as Shopee and digital or financial services firms, ensuring stable and visible income streams.
• There is upside potential from rental reversion as both properties have current rental rates below market levels, particularly for Science Park Drive.
• The deal is expected to be immediately accretive to distributions per unit, adding 1.36% to DPU upon full completion.
• However, the accretion to DPU from this acquisition is relatively modest compared to other REIT deals, which may offer higher uplift from similar-sized transactions.
• At the time of the announcement, the REIT was trading at approximately 1.16 times price-to-book, which is slightly above its historical average valuation.
• CapitaLand Ascendas REIT's dividend yield is at about 5.7%, which is consistent with the REIT’s historical dividend yield.

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Check out Beansprout's guide to the best stock trading platforms in Singapore with the latest promotions to invest in CapitaLand Ascendas REIT.

Related Links:

• Capitaland Ascendas REIT share price history and share price target
• Capitaland Ascendas REIT dividend yield and dividend forecasts

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