CapitaLand Ascendas REIT Buying Seagate Singapore R&D Building for $163M

CapitaLand Ascendas REIT has agreed to acquire an R&D and business park property used by data storage firm Seagate in Singapore’s One North district for S$218.2 million ($163.2 million).

The 2015-vintage building at 26 Ayer Rajah Crescent serves as Seagate’s primary hub for research and development outside the US, CLAR’s manager said Tuesday in a release. Known as The Shugart, after Seagate’s late co-founder Alan Shugart, the asset’s net lettable area of 440,028 square feet (40,880 square metres) is spread across a six-storey podium and a nine-storey tower.

SGX-listed CLAR is buying the building from Seagate Singapore and plans to lease it back to the tech company for 10 years, with an additional 10-year renewal option. The leasehold property has a remaining land tenure of 20 years.

“The acquisition of Seagate’s Singapore R&D facility is a strategic fit with our existing portfolio,” said William Tay, CEO of the trust’s manager, which is owned by CapitaLand Investment. “Singapore remains one of our core markets and we are scaling up our presence with a highly sought-after asset in the heart of the R&D and technology district at One North.”

One North Footprint Grows

CLAR’s existing properties at One North include Nexus, Galaxis, the Grab headquarters, Neuros & Immunos and Nucleos, representing assets under management of S$1.7 billion and net lettable area of 2 million square feet.

Upon completion of the proposed deal, the REIT’s footprint in the new-economy hub is set to rise to S$1.9 billion in AUM and 2.5 million sq ft of NLA. The proportion of business space and life sciences properties will increase to S$8.1 billion of the trust’s S$16.7 billion portfolio.

At a 5.1 percent discount to an independent market valuation, CLAR is paying S$496 ($371) per square foot of NLA for The Shugart, which features R&D and cleanroom facilities, data centre space and employee perks like a sky garden, multi-purpose sports hall and gymnasium. The initial net income yield is estimated at 8.3 percent.

The acquisition is expected to be completed in the second quarter of 2023 at a total cost of S$232.4 million after fees and duties, at which time CLAR will own 231 investment properties comprising 98 in Singapore, 36 in Australia, 48 in the US and 49 in Europe.

Also Tuesday, CLAR announced the launch of a private placement to raise S$450 million in capital, including S$139.5 million to partly fund the acquisition of The Shugart, S$129.9 million to partly fund the potential acquisition of an asset “in a key gateway city in Europe”, and S$64.4 million to partly finance the proposed redevelopment of a logistics property in Singapore.

Tech Industry Plays

CLAR’s Seagate buy is the second tech-oriented acquisition announced this week by a Singapore-based investment manager, following SC Capital Partners’ purchase of a mainland China project earmarked for an electric car battery maker.

SC Capital has joined forces with THI Holding Management Corporation to buy a 50,000 square metre (538,196 square foot) plot at Suzhou Industrial Park near Shanghai, to be developed into 103,000 square metres of gross lettable area.

An EV battery pack company, Zero Point, has signed up as the anchor tenant for the project and will use its space for R&D and battery pack production, while the rest of the facility will be leased mostly to other high-tech manufacturers.