CapitaLand India Trust (CLINT) has entered into a forward purchase agreement with Phoenix Group to acquire IT buildings with a total leasable area of 2.5 million square feet (sq ft) in HITEC City, India. HITEC City is a major IT and office hub in Hyderabad where many large multinational companies are located.
The acquisition of the strategically located assets is expected to increase CLINT’s earnings and distributions for Unitholders. Pro forma net profit from the buildings is forecasted to be approximately S$4.5 million2 on a stabilised basis. Pro forma distribution per unit is expected to increase from 6.45 cents to 6.47 cents3.
As part of the forward purchase arrangement, CLINT will provide funding of INR2.15 billion (S$34.68 million)4 to refinance the existing loan and receive interest on the funding at a rate which is higher than its borrowing cost. CLINT will also provide funding in future towards development of the buildings and acquire the buildings at a price to be determined5 as and when each building is constructed and leased up to 90%. The acquisition is attractive as its capitalisation rate is higher compared to the market’s capitalisation rates.
Sanjeev Dasgupta, Chief Executive Officer of CapitaLand India Trust Management Pte. Ltd. (the Trustee-Manager of CLINT), said: “The forward purchase allows us to secure prime assets that will further strengthen our presence in Hyderabad, which has strong leasing demand from multinational companies. The buildings are situated within the city’s prime IT Corridor in HITEC City and CLINT is well established in this location with a portfolio of approximately 5.2 million sq ft with high levels of occupancy.”
CLINT has a long-standing partnership with Phoenix Group since 2011, having acquired five buildings with approximately 2.1 million sq ft of total leasable area through a forward purchase agreement. The five buildings are located within CLINT’s business park, aVance Hyderabad and it plans to acquire another two buildings (aVance 5 and aVance A1) in aVance Hyderabad from Phoenix Group within the next 18 months, further enhancing CLINT’s portfolio.
