SINGAPORE (Sept 18): CapitaLand has acquired a portfolio of 16 freehold, Class B multifamily properties in the US for US$835 million ($1.14 billion).
The portfolio comprises 3,787 apartment units in the suburban communities of Seattle, Portland, Greater Los Angeles and Denver, the sale and purchase agreement was signed through unit CapitaLand International. This translates to a price per unit of US$220,000, which is in line with market transactions.
CapitaLand’s latest acquisition marks the group’s foray into the country’s multifamily asset class.
It more than doubles the group’s investment in the US to over US$1.5 billion, and expands its presence in the market to over 6,500 units.
In a Tuesday announcement, CapitaLand notes that the portfolio’s properties are operating at over 90% average occupancy with an average length of stay of about two years.
According to the developer, these professionally managed properties are well connected via highways or commuter rail systems with easy access to neighbourhood amenities, as well as offer facilities such as swimming pools and clubhouses in an expansive garden-style compound.
Being located in suburban regions that have seen growing employment rates, they also see strong demand from a diverse mix of middle-income and skilled professionals working in the surrounding employment hubs.
Given that the properties’ leases are generally renewed annually, CapitaLand International’s CEO, Gerald Yong, expects the company to gain from rental uplifts post the refurbishment of the portfolio, which will take place in phases over the next few years.
“The stable, reliable cash flows of these Class B multifamily properties make this suburban portfolio more attractive than the higher-priced urban core segment,” says Yong.
“This latest acquisition in the US, the world’s biggest economy, would expand CapitaLand’s global investment portfolio, diversify our business outside of our two core markets of Singapore and China and allow us to grow new businesses. It also enables us to diversify our investment property portfolio into developed markets as we continue to scale up our presence in our core emerging markets of China and Vietnam,” adds Lee Chee Koon, president and group CEO of CapitaLand Group.
Shares in CapitaLand closed 3 cents lower at $3.28 on Monday.