a-iTrust to buy industrial park leased by iPhone maker Pegatron

Ascendas Property Fund Trustee, the trustee manager of Ascendas India Trust (a-iTrust), on Friday announced that it has entered into an agreement with real estate firm Casa Grande Group to acquire its first industrial facility located at Mahindra World City in Chennai.

a-iTrust will also provide funding for the development of the project as part of the forward purchase arrangement.

The project is an industrial facility with a net leasable area of approximately 0.42 million sq ft and fully pre-leased to Pegatron Technology India, a wholly-owned subsidiary of Pegatron Corporation, one of the contract manufacturers of Apple phones.

Pegatron Corporation is a listed Taiwanese contract electronics manufacturer. Pegatron had recently signed an MoU with the Tamil Nadu government committing investement of Rs 1,100 crore for its Chennai production facility and offering to create jobs for 14,079 people. According to a statement, a-iTrust proposes to fund the balance development of the project and subsequently acquire the asset.

Sanjeev Dasgupta, CEO of the trustee manager, said, “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.”

Pursuant to the deal structure, a-iTrust will provide funding towards the development of the project. Upon completion of the project and fulfilment of other key conditions, a-iTrust will purchase 100% of the shares of the entity developing the project.

Further, a-iTrust has the option to provide additional funding to develop industrial facilities of approximately 0.37 million sq ft, subject to leasing milestones and other conditions being met.

The transaction offers a diversification opportunity for a-iTrust into the industrial asset class and fits the trustee-manager’s investment strategy to invest in quality logistics and industrial assets.

Mahindra World City is an established industrial micro-market occupied by leading blue-chip companies including BMW, BASF, Fujitec, NCR Corporation and B Braun.

Construction of the project is expected to be completed by mid-2021. The project is fully pre-committed to Pegatron, with a 7-year lock-in period and annual escalations.

The trustee manager believes that the transaction will improve the earnings and distributions for unitholders. The pro-forma impact of the proposed acquisition on FY 2020 distribution per unit (DPU) is expected to be an accretion of 0.04 Singapore cents1.

As a result of the acquisition of this industrial facility, a-iTrust’s committed portfolio size will increase by 1.9% from around 22.8 million sq ft to close to 23.2 million sq ft.

a-iTrust was listed on the Singapore Exchange Securities Trading (SGX-ST) in August 2007 as the first Indian property trust in Asia. Its principal objective is to own income-producing real estate used primarily as business space in India. As of December 31, 2020, a-iTrust’s asset under management stands at S$2.1 billion. Its portfolio comprises seven world-class IT business parks and one logistics park in India, namely the International Tech Park Bengaluru, International Tech Park Chennai and CyberVale in Chennai, International Tech Park Hyderabad, CyberPearl, aVance in Hyderabad, aVance in Pune and Arshiya warehouses near Mumbai.