CAPITALAND India Trust : CY6U 0% (Clint) has inked a forward purchase agreement to acquire IT buildings with a total leasable area of 2.5 million square feet (sq ft) in Hyderabad, India from commercial real estate developer Phoenix Group.
Acquiring these assets is expected to increase Clint’s earnings and distributions for unitholders, said its trustee-manager on Friday (May 3).
The buildings are in Hitec City, which the trustee-manager highlighted to be a “major IT and office hub in Hyderabad where many large multinational companies are located”.
Sanjeev Dasgupta, chief executive of the trustee-manager, added that the trust is “well established in this location with a portfolio of approximately 5.2 million sq ft with high levels of occupancy”.
As part of the forward purchase agreement, Clint will provide inter-corporate deposits of about 2.2 billion rupees (S$34.7 million) to Phoenix Group for the repayment of existing loans.
The trust has also committed to providing future funding towards developing the buildings before they are acquired by Clint at “a price to be determined”, as and when each building is constructed and up to 90 per cent leased.
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Clint’s trustee-manager said it views the acquisition as attractive as the deal’s capitalisation rate is higher than market capitalisation rates.
Based on pro forma estimates, acquiring these buildings would have resulted in an FY2023 distribution per unit of S$0.0647, up from S$0.0645.
This is assuming the deal was completed on Jan 1, 2023, and that Clint held interest in Phase 1 of the project through to Dec 31, 2023.
Net profit from the buildings is forecast to be about S$4.5 million on a stabilised basis.
Clint’s portfolio in Hyderabad currently comprises three business parks: aVance Hyderabad, CyberPearl and International Tech Park Hyderabad.
The trust had earlier acquired five buildings with 2.1 million sq ft of total leasable area through Phoenix Group through forward purchase agreements as well.
It plans to acquire two more buildings in aVance Hyderabad from Phoenix Group within the next 18 months.
Units of Clint closed on Thursday at S$1.03, up S$0.03 or 3 per cent.
