CGS International
May 28, 2025
CapitaLand Ascendas REIT (CLAR) Proposes S\$700m Singapore Acquisition: A Detailed Analysis
CapitaLand Ascendas REIT (CLAR) is set to expand its Singapore footprint with a proposed S\$700 million acquisition of 9TS and 5SPD. This strategic move is expected to increase CLAR’s Singapore exposure to 67% of its enlarged Assets Under Management (AUM), which will reach S\$17.6 billion. The acquisition is projected to boost proforma Distribution Per Unit (DPU) by 1.4%, with potential upside from positive rental reversions upon lease expirations. CGS International maintains an Add rating for CLAR, with an unchanged DDM-based Target Price (TP) of S\$3.10. [[1]]
Acquisition Overview: 9TSD and 5SPD
CLAR has announced the proposed acquisition of a 6-storey tier-III data centre at 9 Tai Seng Drive (9TSD) and a 6-storey business space at 5 Science Park Drive (5SPD), totaling S\$700.2 million. [[1]]
- 9TSD: Features a Net Lettable Area (NLA) of 6,968 sq m and is fully occupied with a Weighted Average Lease Expiry (WALE) of 4.4 years. Tenants include end-users from the digital, e-commerce, and financial services industries. The purchase price is S\$455.2 million, translating to a 7.2% Net Property Income (NPI) yield. [[1]]
- 5SPD: Offers an NLA of 22,488 sq m and is located in the “Geneo” life sciences and innovation cluster within Singapore Science Park 1. The property is fully tenanted by Shopee, with a remaining WALE of 1.5 years. The purchase consideration of S\$245 million includes a S\$30 million deferred payment due in November 2026. The initial NPI yield is 6.1%. [[1]]
The transaction is pending approval from unitholders at an Extraordinary General Meeting (EGM). [[1]]
Strategic Benefits and Rental Uplift Potential
These acquisitions will increase CLAR’s Singapore exposure to 67% of its enlarged portfolio AUM of S\$17.6 billion and strengthen its presence in the Geneo area of Singapore Science Park 1. The acquisition of 9TS will elevate CLAR’s Singapore data centre AUM to over S\$1 billion, increasing its overall data centre AUM by 32.8% to approximately S\$1.9 billion. [[1]]
Management sees significant opportunities for rental uplift upon lease renewal at both 5SPD and 9TS. [[1]]
- 5SPD: Current passing rent is about 15% below comparable market rates, offering potential for positive rental reversion when the existing lease ends in 2026F. [[1]]
- 9TS: Passing rates are roughly 30% below comparable market colocation rates, suggesting substantial rental uplifts upon lease renewals. [[2]]
In the long term, CLAR may expand the existing IT capacity by converting unutilized space into data halls, subject to regulatory approvals, which should further improve asset returns. [[2]]
Funding Through Private Placement
CLAR plans to undertake a private placement to raise approximately S\$500.0 million, priced between S\$2.465 and S\$2.515 per unit. Of this, S\$412.6 million will fund the acquisitions, and S\$81.6 million will reduce debt. [[2]]
- The proforma total DPU accretion from the two properties is estimated at 1.4%. Post-acquisition, gearing is projected at 38.3%, compared to 38.9% as of 1Q25. [[2]]
Investment Rating and Recommendation
CGS International maintains an Add rating with an unchanged DDM-based TP of S\$3.10. The firm favors CLAR for its diversified, resilient portfolio and healthy balance sheet. Management will continue to focus on asset enhancement/redevelopment projects and potential acquisitions in Singapore and Europe. [[2]]
- Potential re-rating catalysts include a faster-than-expected global recovery and accretive new acquisitions. Downside risks involve a prolonged economic downturn that could impair the ability to price rents for positive reversions. [[2]]
As of May 28, 2025, the consensus rating for CLAR is Buy with 16 recommendations, Hold with 0, and Sell with 0. The current price is S\$2.61, with a target price of S\$3.10, offering an upside of 18.6%. [[2]]
Key market data includes: Reuters: CAPD.SI, Bloomberg: CLAR SP, Market cap: US\$8,927m (S\$11,485m), Average daily turnover: US\$24.58m (S\$32.58m), Current shares o/s 4,400m, Free float: 80.3%. [[2]]
Financial Forecasts and Key Ratios
Key financial forecasts indicate steady growth and profitability for CLAR. [[2]]
Key Financial Forecasts
|
Dec-25F |
Dec-26F |
Dec-27F |
| Net Profit (S\$m) |
670.0 |
691.0 |
711.4 |
| Core EPS (S\$) |
0.15 |
0.16 |
0.16 |
| Core EPS Growth |
3.0% |
2.8% |
|
| FD Core P/E (x) |
17.15 |
16.65 |
16.20 |
| Recurring ROE |
6.48% |
6.67% |
6.86% |
| P/BV (x) |
1.11 |
1.11 |
1.11 |
| DPS (S\$) |
0.15 |
0.16 |
0.16 |
| Dividend Yield |
5.90% |
6.08% |
6.25% |
Price performance shows a mixed trend with slight fluctuations over the past year. [[2]]
SREITs Peer Comparison
A comparison of SREITs reveals CLAR’s competitive positioning within the market. [[3]]
SREITs Peer Comparison
| Company |
Bloomberg Ticker |
Recommendation |
Price (LC) as at 27 May 25 |
Target Price (LC) (DDM-based) |
Mkt Cap (US \$m) |
Last reported asset leverage |
Last stated NAV |
FY25F Dividend Yield (%) |
FY26F Dividend Yield (%) |
FY27F Dividend Yield (%) |
| CapitaLand Ascott Trust |
CLAS SP |
Add |
0.86 |
1.13 |
\$2,538 |
39.9% |
1.15 |
7.1% |
7.4% |
7.4% |
| CDL Hospitality Trust |
CDREIT SP |
Add |
0.76 |
0.87 |
\$743 |
41.8% |
1.48 |
6.8% |
8.0% |
8.3% |
| Far East Hospitality Trust |
FEHT SP |
Add |
0.56 |
0.74 |
\$880 |
31.2% |
0.92 |
6.9% |
6.9% |
7.0% |
| CapitaLand Ascendas REIT |
CLAR SP |
Add |
2.61 |
3.10 |
\$8,927 |
38.9% |
2.20 |
5.9% |
6.1% |
6.2% |
| ESR-REIT |
EREIT SP |
Add |
2.20 |
3.55 |
\$1,372 |
42.8% |
0.28 |
9.9% |
10.3% |
10.4% |
| Frasers Logistics & Commercial Trust |
FLT SP |
Add |
0.79 |
1.11 |
\$2,315 |
36.1% |
1.08 |
7.2% |
6.8% |
6.9% |
| Keppel DC REIT |
KDCREIT SP |
Add |
2.17 |
2.48 |
\$3,806 |
30.2% |
1.53 |
4.6% |
4.7% |
4.9% |
| Mapletree Industrial Trust |
MINT SP |
Add |
1.92 |
2.56 |
\$4,256 |
40.1% |
1.71 |
7.1% |
6.9% |
6.9% |
| Mapletree Logistics Trust |
MLT SP |
Add |
1.10 |
1.63 |
\$4,339 |
40.7% |
1.31 |
7.3% |
6.8% |
6.7% |
| Keppel REIT |
KREIT SP |
Add |
0.86 |
1.08 |
\$2,579 |
42.1% |
1.24 |
6.3% |
6.7% |
6.8% |
| OUE REIT |
OUEREIT SP |
Add |
0.28 |
0.33 |
\$1,177 |
40.6% |
0.59 |
7.3% |
7.7% |
8.1% |
| CapitaLand Integrated Commercial |
CICT SP |
Add |
2.08 |
2.45 |
\$11,829 |
38.7% |
2.09 |
5.3% |
5.7% |
5.9% |
| Frasers Centrepoint Trust |
FCT SP |
Add |
2.19 |
2.70 |
\$3,442 |
38.6% |
2.22 |
5.6% |
5.7% |
5.9% |
| Lendlease Global Commercial REIT |
LREIT SP |
Add |
0.48 |
0.69 |
\$913 |
38.0% |
0.74 |
8.2% |
8.3% |
8.4% |
| Mapletree Pan Asia Commercial Trust |
MPACT SP |
Add |
1.17 |
1.48 |
\$4,793 |
37.7% |
1.78 |
6.9% |
7.1% |
7.3% |
| Parkway Life REIT |
PREIT SP |
Add |
4.07 |
4.91 |
\$2,064 |
36.1% |
2.42 |
3.8% |
4.1% |
4.3% |
Detailed Financial Analysis
A review of CLAR’s profit and loss statements, balance sheets, and cash flow statements provides a comprehensive financial overview. [[3]]
Profit & Loss Analysis
Rental revenues show a steady increase from Dec-24A to Dec-27F. Net property income consistently grows, driven by efficient expense management. EBITDA and EBIT also reflect positive trends. [[3]]
Balance Sheet Review
Total investments increase moderately, reflecting CLAR’s strategic acquisitions and asset management. Total equity also sees a slight rise, indicating financial stability. [[3]]
Cash Flow Dynamics
Cash flow from operations remains robust, supporting CLAR’s investment activities and dividend payouts. The firm maintains a healthy free cash flow, ensuring sustainable growth. [[3]]
Key Financial Ratios
Key ratios indicate stable financial health and operational efficiency. NPI growth and gross interest cover demonstrate CLAR’s ability to manage its assets and liabilities effectively. [[3]]
Disclaimer
This report is intended for informational purposes only and does not constitute an offer or solicitation to buy or sell securities. CGS International and its affiliates disclaim any liability for any losses or damages resulting from reliance on this report. [[4]]-[[8]]
