CapitaLand Ascendas REIT - RHB Invest 2023-05-17: Strengthening Its Market Positioning; Stay BUY

• CapitaLand Ascendas REIT (SGX:A17U)’s proposed acquisition of Seagate’s R&D facility is positive – we like the asset’s modern specifications, location, and long lease term. It is also in the process of finalising another acquisition in Europe and redevelopment of a logistics facility in Singapore.
• - Read this at SGinvestors.io -
• Overall, we believe the transaction reinforces CapitaLand Ascendas REIT’s dominant positioning in the business space and life sciences sectors, and the one-north cluster.

Proposed acquisition of Seagate's Singapore headquaters

• The acquisition of The Shugart (Seagate’s Singapore headquarters) for S$218m is a ~5% discount to latest valuation. The 8-year-old modern specification asset located in the prime one-north cluster is mainly used for R&D purposes and has a balance 20-year lease. Initial NPI yield is an attractive 8.3% (post-transaction cost: 7.8%), i.e. slightly higher than recent transactions and indicating a slight softening in pricing expectations in our view amid the rising interest rate hurdles.
• - Read this at SGinvestors.io -
• Post transaction, business parks will account for ~49% of CapitaLand Ascendas REIT’s portfolio with prime one-north cluster assets representing 13% of total assets under management or AUM. This acquisition is slated for completion by 2Q23.

Evaluating potential European acquisition

• Read more at SGinvestors.io.

Vijay Natarajan RHB Securities Research | https://www.rhbgroup.com/ 2023-05-17 SGinvestors.io

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