Ascendas India Trust has entered into a forward purchase agreement with Casa Grande Group to acquire an industrial facility at Mahindra World City, an integrated development located in Chennai, India. The facility comprises a net leasable area of approximately 0.42 million square feet.
The facility is fully pre-leased to Pegatron Technology India, a wholly owned subsidiary of Taiwanese electronics manufacturer Pegatron Corporation.Construction for the facility is ongoing, with expected completion by mid-2021.
Ascendas India Trust proposes to fund the balance development of the facility amounting to 1.4 billion rupees ($25.5 million). Upon completion, the trust will subsequently acquire 100% of the asset. The purchase price is expected to be approximately 2.1 billion rupees ($38.3 million).
The trust will also have the option to provide additional funding to develop additional industrial facilities of approximately 0.37 million square feet, subject to leasing milestones and other conditions being met.
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Post-transaction, Ascendas India Trust’s committed portfolio size will increase by 1.9% from approximately 22.8 million square feet to 23.2 million square feet. The pro-forma impact of the proposed acquisition on FY2020 distribution per unit (DPU) is expected to be an accretion of 0.04 cents.
Sanjeev Dasgupta, CEO of the trustee-manager says, “The proposed acquisition will add exposure to the industrial asset class and diversify our portfolio. The industrial segment has been resilient through the pandemic. The Project also offers an opportunity to have a leading manufacturer like Pegatron within our tenant portfolio and support their expansion in India.”
The trust also notes that the facility has reduced execution and leasing risks, given that there is a seven year lock-in period and annual escalations.
Shares in Ascendas India Trust closed 1 cent of 0.6% higher at $1.58 on March 4.
