CLCT enters into China logistics with acquisitions worth $350.7m

Four prime logistics properties are expected to be acquired. 

CapitaLand China Trust Management Limited (CLCTML)  announced today that CapitaLand China Trust (CLCT) would be foraying into China logistics with an acquisition valued at approximately $350.7m (RMB 1.68b).

These four logistics assets are based in Shanghai, Kunshan, Wuhan and Chengdu. The cities mentioned are key logistics hubs in China and fall within CapitaLand’s five core city clusters. 

The move would also increase its exposure to new economy asset classes after CLCT’s initial purchase of a portfolio of five business park properties. 

A property value was agreed upon at approximately $350.7m (RMB 1.68b), which represents a discount of about 0.6% to the aggregate valuation. This would put CLCT’s total cost at around $297.7m, which would be subjected to post-completion adjustments. 

The acquisition is expected to be completed by the end of 2021, with a distribution per unit accretive by 3.5% on a pro forma basis. 

Overall, the four logistics properties have a total gross floor area of 265,259 square metres with a committed occupancy of 96.3% and weighted average lease to expiry of 2.1 years as at August 31, 2021. Three of the properties were completed between 2016 to 2018, with the fourth being completed in 2010. 

Tan Tze Wooi, CEO, CLCTML, has said that this marked CLCT’s entry into China’s logistics sector with a quality portfolio. 

“We are pleased to mark CLCT’s entry into China’s burgeoning logistics sector with a quality portfolio of logistics assets, in an investment that is aligned with China’s plans for a domestic consumption-driven, higher-value and service-led economy. The acquisition will enable CLCT to tap China’s strong demand for logistics properties, which is supported by conducive government policies and boosted by an accelerated growth in e-commerce. The continuing favourable supply-demand dynamics in China’s logistics properties market with robust net absorption are expected to sustain rental growth for prime logistics assets,” Tan said.