The manager of CapitaLand India Trust (CLINT) has entered into a forward purchase agreement with Hyderabad property developer Phoenix Group to acquire IT buildings with a total leasable area of 2.5 million sq ft. The buildings are located in the tech hub, Hyderabad Information Technology and Engineering Consultancy City (HITEC City).
As part of the forward purchase agreement, CLINT will provide funding of INR2.15 billion ($34.7 million) to refinance the existing loan and receive interest at a rate that is higher than its borrowing cost. CLINT will also provide funding for the development of the buildings and acquire them at a price that will be determined when the building is constructed and leased up to 90%.
According to the manager, the acquisition is an attractive one as its capitalisation rate is higher compared to the market’s capitalisation rates.
The acquisition is expected to increase CLINT’s earnings and distributions per unit (DPUs). The pro forma net profit from the buildings is forecasted to be $4.5 million on a stabilised basis. Pro forma DPU, if CLINT had completed the acquisition on Jan 1, 2023, and held the interest in Phase 1 of the project to Dec 31, 2023, would have been 6.47 cents, from 6.45 cents originally.
“The forward purchase allows us to secure prime assets that will further strengthen our presence in Hyderabad, which has strong leasing demand from multinational companies. The buildings are situated within the city’s prime IT Corridor in HITEC City and CLINT is well established in this location with a portfolio of approximately 5.2 million sq ft with high levels of occupancy,” says Sanjeev Dasgupta, CEO of the manager.
This is not the first partnership with Phoenix Group; CLINT has worked with the developer since 2011 having acquired five buildings with approximately 2.1 million sq ft of total leasable area through a forward purchase agreement.
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Units in CLINT closed at $1.03 on May 2.
