"Overall we like this acquisition and see several positives from this move," state Bank of America analysts Donald Chua and Kylie Wan.
First, these assets have occupancy of between 90 and 100%, and have rent escalations of between 1 and 2.5.%. Tenants are predominantly multinational corporations with "solid" credit profiles the likes of Toll Offshore Petroleum Services, J&J, Dyson and Merck.
Also, the acquisitions will increase data centres in CLAR's portfolio composition to 13%. The Osaka data centre, to be bought from Mitsui, was completed in just 2023 and is deemed efficient and has a built-in rent escalation of 1%.
Meanwhile, CLAR's Singapore-based assets remain at the clear majority with 66% of the REIT's AUM. "We think this move will sit well with investors," state Chua and Wan.
The analysts note that these deals will be accretive to CLAR's DPU, with pro-forma accretion at 2.1% - a level which will rise to 4.2% if an earlier round of acquisitions plus future acquisitions are all taken into account.
On the other hand, pro-forma gearing remains "healthy" at around 40%.
In addition, there's growth potential. Specifically, the Osaka data centre has a power capacity of 40.5MW but with a potential expansion capacity of 5.4MW, possibly by 2030, thereby lifting rental income then.
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"We see more potential partnerships in the future between CLAR and the vendor, Mitsui, with the latter said to have more datacenter developments in the pipeline," state Chua and Wan, who have kept their "buy" call and $3.10 price objective.
"We see sustained positive reversions, and uplift from acquisitions and asset enhancements to drive a DPU CAGR of +3.3% in FY2025 to FY2027," state Chua and Wan, perceive the valuation "attractive at 1.1x P/NAV, which is below its mean, and also FY2026 DPU yield of more than 6.1%.
Lock Mun Yee and Li Jialin of CGS International have similarly kept their "add" call but they have a more bullish target price of $3.21. "We continue to like CLAR for its diversified and resilient portfolio."
For them, potential re-rating catalysts for this REIT include completion of ongoing asset enhancement initiatives or redevelopment projects, which should boost
contributions when completed between 1HFY2026 and 2HFY2028, as well as accretive new acquisitions.
On the other hand, downside risks include a protracted economic downturn that could adversely impact its ability to price rents for positive reversions.
Based on their existing forecasts, the FY2026 dividend yield estimate for CLAR by BofA and CGS International is 6.08% and 6.23% respectively.
CLAR units closed $2.50 on March 27, up 0.81%.
