CLAR on May 28 announced plans to pay $700 million for data centre 9 Tai Seng Drive and 5 Science Park Drive, where Shopee is leasing for its office.
9 Tai Seng Drive is acquired at an agreed property value of $455 million and is a discount of 2.2% off its independent valuation.
This property will provide a first-year net property income yield of 7.2% pre-transaction costs and 7.1% post-transaction costs based on existing colocation leases.
The $245 million paid for 5 Science Park Drive is a 7% discount off the independent valuation and Koh estimates will give a first-year NPI yield at 5.3% pre-transaction costs and 5.0% post-transaction costs, if a $30 million in deferred consideration is included.
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Upon the completion of these two acquisitions, CLAR's AUM in Singapore will increase by 6.6% to $11.7 billion, or 67% of its total portfolio valuation, up from 65%.
The AUM for its data centre assets would expand by 32.8% to $1.9 billion, to account for 10.8% of CLAR’s total portfolio valuation, up from 8.3%.
According to Koh, the proposed acquisitions are accretive to CLAR's pro forma 2024 DPU by 0.206 cents or 1.4%.
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Assuming Shopee extends its lease, which expires at the end of the year, by another 3 years with a reversion of 15%, DPU accretion could improve to 1.6%.
CLAR's NAV per unit could increase 3.5% to $2.35 while aggregate leverage is expected to dip 0.5ppt to 38.4%.
To fund the acquisitions, CLAR has placed out $500 million worth of new units at $2.47 each, and has also taken a bank loan of $200 million at 3%.
Koh points out that the Singapore data centre market is known to be "supply constrained" with vacancy of just 2% and 9 Tai Seng Drive can enjoy higher rental upon renewal as its current rates at around 30% below market.
CLAR units changed hands at $2.63 as at 1.48 pm.
