[SINGAPORE] CapitaLand Ascendas Reit (Clar) is proposing to launch its first logistics developments in the UK at an estimated total investment cost of S$350.1 million.
In the East Midlands, a key logistics market in the UK, Clar is proposing to acquire two plots of freehold land from DHL Real Estate (UK). The Reit plans to develop four new logistics properties on the site. Completion of the acquisitions is expected in Q3 of 2025.
“The proposed developments align with Clar’s strategy to expand its logistics portfolio in the UK where demand is expected to be underpinned by e-commerce growth and occupiers’ evolving supply chain strategies,” the manager said on Monday (Aug 11).
Upon completion, the four new properties are set to boost the assets under management (AUM) of Clar’s UK logistics portfolio by 43.5 per cent to around S$1.2 billion, said William Tay, executive director and chief executive officer of the manager.
This will grow the Clar’s UK logistics portfolio to 42 investment properties. It will raise the Reit’s UK portfolio value by 27.2 per cent to around S$1.6 billion, representing 10 per cent of the Reit’s total AUM of S$17.2 billion.
The manager noted that the properties are “strategic fits” with Clar’s existing logistics assets, which are spread across key industrial areas and established distribution centres in the UK, with good connections to core urban areas.
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The proposed addition of the four new properties to Clar’s portfolio will capitalise on the demand for high-quality and well-located space, Tay added.
The centralised location of the East Midlands and its network of transport links add to the appeal of the properties. In 2024, the East Midland market accounted for the largest share of logistics take-up in the UK, at 30 per cent, the manager noted.
The manager intends to finance the total investment cost through a combination of internal resources and/or existing debt facilities.
Assuming that the proposed developments are completed on Jan 1, 2024, the pro forma impact on distribution per unit (DPU) for the financial year ended Dec 31, 2024, is expected to increase by around S$0.00021 or a DPU accretion of 0.14 per cent.
The stabilised net property income yield for the properties is expected to be around 7.3 per cent of pre-transaction costs and 6.9 per cent of post-transaction costs.
The properties
Of the proposed developments, which are expected to commence in H1 2026, one property is to be built on the Manton Wood land plot and three on the Towcester land plot. They are expected to be complete during H1 2027 and H2 2028 respectively.
The Manton Wood site, valued at S$22.9 million, is located at Sherwood Drive, Manton Wood Distribution Park, in the town of Worksop.
With a land area of 108,234 square metres (sq m), it will feature a single-storey property with a gross internal floor area of 42,921 sq m.
The manager noted that Manton Wood offers easy access to local and national distribution routes. The land plot is also within a 4.5 hour drive from key consumer and manufacturing hubs across the north-east, north-west, Midlands and central London areas.
The Towcester land plot, valued at S$81.9 million, is located at Watling Street in the town of Towcester, on a land parcel north of the garden centre named Bell Plantation.
With a 322,634 sq m land area, it will house three single-storey properties with a total gross internal floor area of 92,630 sq m. The gross internal floor area of the each property ranges from 20,700 sq m to 38,300 sq m.
Towcester is in the UK’s logistics “Golden Triangle”, a region that has expanded due to the growth of warehouse and distribution premises, driven by online retail, supply chain reconfiguration, improved connectivity and demand for faster nationwide delivery.
Alongside the Towcester acquisition, a land plot in its vicinity will be acquired to satisfy a biodiversity net gain required by UK law. This rule requires developers to ensure their developments result in improvements to natural habitat quality.
Units of Clar finished Friday 0.4 per cent or S$0.01 lower at S$2.72.
