CapitaLand Ascendas REIT Selling Singapore Shed to GDS International for $86M

CapitaLand Ascendas REIT has agreed to sell a warehouse in western Singapore to data centre operator GDS International for S$112.8 million ($86.4 million).

The sale price for 21 Jalan Buroh represents a premium to the original purchase price of S$58.4 million in June 2006 and the average of two independent market valuations of S$67.5 million, the SGX-listed trust’s manager said Friday in a release.

“The proposed divestment is in line with the manager’s proactive asset management strategy to improve the quality of CLAR’s portfolio and optimise returns for unitholders of CLAR,” said the manager, which is owned by Temasek-controlled CapitaLand Investment.

The international unit of Shanghai-based GDS Holdings is picking up the Singapore shed just weeks after it took over the lease of a Goodman-built data centre at a converted factory site in Hong Kong’s Tsuen Wan West area.

Fundraising Ramp-Up

The complex at 21 Jalan Buroh consists of a three-storey ramp-up warehouse and a seven-storey ancillary office block. The property near Tuas port has a gross floor area of 39,978 square metres (430,320 square feet) and a remaining land lease tenure of 31 years.

The proposed divestment, due to be completed in the fourth quarter of 2024, is deemed an “interested person transaction” in light of GDS’s backing by Temasek-owned STT Global Data Centres.

GDS revealed on its second-quarter earnings call that it has begun Series B fundraising for GDS International and expects to complete the offering before the end of the year. Also known as DigitalLand Holdings, GDS International oversees the company’s operations in Hong Kong, Malaysia, Indonesia, Singapore, and Japan.

The new funding round comes after GDS International in the second quarter closed on $672 million of Series A funding from a consortium of investors including Chinese private equity major Hillhouse and its real assets arm Rava Partners, Boyu Capital, Princeville Capital and Tekne Capital, with the capital raised amounting to a stake of 47.3 percent for the investors.

The fundraise was first announced in March with an initial target of $587 million.

Diversified Portfolio

CLAR’s net proceeds on the disposal after divestment costs are estimated at S$102.9 million. Upon completion, the S$16.9 billion trust will own 228 properties comprising 96 assets in Singapore, 34 in Australia, 48 in the US and 50 in Europe.

The REIT’s net property income rose 3.9 percent year-on-year to S$528.4 million during the first six months of the year, with the manager attributing the growth to contributions from last year’s acquisitions and newly completed properties.

“Our well-diversified portfolio and diverse tenant mix continues to deliver a solid financial and operational performance in 1H 2024,” CEO William Tay said in the manager’s July announcement. “This growth is attributable to the higher revenue and net property income, as well as a stable cost of debt.”