CapitaLand Ascendas REIT Makes Bold S\$350 Million Foray into UK Logistics – Major Portfolio Expansion, Green Focus, and Potential DPU Upside

Summary of Key Points

• CapitaLand Ascendas REIT (CLAR) to invest S\$350.1 million in its first UK logistics developments
• Four new best-in-class, green-certified logistics properties to be developed in the East Midlands, UK
• Significant 43.5% increase in CLAR’s UK logistics asset value to approximately S\$1.2 billion
• Projects expected to be DPU-accretive, with estimated first-year NPI yields of up to 7.5%
• CLAR’s overall UK portfolio to reach S\$1.6 billion, making up 10% of group AUM
• Management highlights strategic location, strong e-commerce demand, and high-quality assets as critical drivers
• Innovative compliance with UK biodiversity rules – includes ‘Biodiversity Net Gain’ (BNG) land acquisition
• Potentially price sensitive: Major capex, DPU accretion, green-certified asset boost, and geographic diversification

In-Depth Analysis for Retail Investors

CapitaLand Ascendas REIT (CLAR) has announced a landmark move to invest S\$350.1 million (£203.5 million) in its inaugural logistics property developments in the United Kingdom, signaling a major step in its international growth strategy and a bold expansion of its logistics portfolio. This is CLAR’s first foray into developing logistics assets in the UK, targeting the East Midlands, a region recognized as a logistics powerhouse with excellent connectivity and robust occupier demand.

Transaction Details and Strategic Merits

• Acquisition and Development: CLAR will acquire two plots of freehold land—Manton Wood (Worksop, Nottinghamshire) and Towcester (Northamptonshire). One logistics property (42,900 sq m GFA) will be built at Manton Wood, and three (ranging from 20,700 to 38,300 sq m GFA each) at Towcester, totaling approximately 135,600 sq m (1.5 million sq ft) GFA.
• Total Investment: About S\$87.2 million (£50.7 million) for Manton Wood and S\$262.9 million (£152.9 million) for Towcester. The Towcester sum includes a deferred consideration and the purchase of a plot of “Biodiversity Net Gain” (BNG) land, a regulatory requirement in the UK.
• Portfolio Impact: Upon completion, CLAR’s UK logistics portfolio will jump to 42 properties, with asset value increasing by 43.5% to S\$1.2 billion. The UK will now represent 10% of CLAR’s total S\$17.2 billion assets under management.
• Timeline: Land acquisition expected to complete in Q3 2025. Construction starts 1H 2026; Manton Wood completes 1H 2027, Towcester in 2H 2028.

Why Shareholders Should Pay Attention

• DPU Accretion: The developments are expected to be immediately accretive to distribution per unit (DPU), with a projected improvement of approximately 0.021 Singapore cents or a DPU accretion of 0.14% on a standalone project basis.
• Attractive Yields: Stabilized first-year net property income (NPI) yields are estimated at 7.3% (pre-transaction costs) and 6.9% (post-transaction costs). Specifically, Manton Wood yields are 7.5%/7.1%, and Towcester 7.2%/6.9%.
• Green Certification: All properties aim for BREEAM “Excellent” certification, with green features including solar panels, EV charging, and daylighting. These assets will boost CLAR’s green-certified UK GFA to 26%, and total portfolio green-certified GFA to 51%.
• Strategic Location: The East Midlands is a top logistics hub, boasting unrivaled motorway access (M1, A1, A5), proximity to major cities, and the UK’s second-largest cargo airport. Over 83% of the UK population is within a 4.5-hour drive from these sites.
• Regulatory Innovation: The Towcester deal includes the purchase of 14.46 acres of agricultural land (‘BNG Land’), dedicated to biodiversity enhancement for 30 years—an innovative response to new UK planning rules. This land is not for development and a waiver was obtained from the MAS (Monetary Authority of Singapore) to allow this purchase.
• Potential Risks: Large capital outlay, long development timeline (some completions only in 2028), and uncertainties regarding leasing and construction costs. However, management believes strong e-commerce and supply chain trends will underpin demand.
• Funding: To be financed via a mix of internal resources and/or existing debt facilities.

Management Commentary

William Tay, Executive Director and CEO of the Manager, highlighted the strategic value of this move: “Embarking on our inaugural logistics developments in the UK marks a significant step forward in our strategy to scale up CLAR’s UK logistics portfolio. With positive structural drivers such as e-commerce and onshoring anticipated to sustain demand, these four new properties are set to boost the asset value of CLAR’s UK logistics portfolio by 43.5% to approximately S\$1.2 billion. Adding these best-in-class and green-certified logistics properties enhances CLAR’s logistics portfolio in the East Midlands, a key market in the UK’s logistics heartlands, and capitalise on occupiers’ demand for high-quality and well-located space.”

Including these projects, CLAR has eight ongoing projects globally, worth about S\$850 million.

What Retail Investors Should Watch For

• This is a major expansion with potentially positive impacts on DPU and long-term asset value.
• The move into UK development adds strategic diversification and exposure to high-growth logistics markets, but also increases development and execution risks.
• The focus on green-certified, large-scale logistics assets positions CLAR to benefit from occupier “flight to quality” and sustainability trends.
• Any delays, cost overruns, or changes in UK logistics demand could affect the financial upside.
• This announcement may be price sensitive, given the size of the investment, expected DPU accretion, and the strategic shift into UK logistics development.

Detailed Asset Breakdown

Manton Wood

• Location: Sherwood Drive, Manton Wood Distribution Park, Worksop, S80 3EG
• Land Area: 26.74 acres (108,234 sq m)
• GFA: 42,921 sq m (single-storey)
• Total Investment Cost: S\$87.2 million (£50.7 million)
• Expected Completion: 1H 2027

Towcester

• Location: Land north of Bell Plantation, Watling Street, Towcester NN12 8EU
• Land Area: 79.72 acres (322,634 sq m), plus 14.46 acres BNG Land (not for development)
• GFA: 92,630 sq m across three units
• Total Investment Cost: S\$262.9 million (£152.9 million)
• Expected Completion: 2H 2028

Conclusion

This sizeable and strategic UK investment by CLAR is set to reshape its portfolio, boost green asset credentials, and deliver DPU accretion. The news is likely to be closely watched by investors for its potential to move CLAR’s share price, given the scale, yield upside, and strategic implications.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, an offer, or a solicitation to buy or sell any securities. Past performance is not indicative of future results. All investments carry risks, including the possible loss of principal. Please consult your own financial advisor before making investment decisions. The information is based on public disclosures and may be subject to change.

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