CapitaLand India Trust&rsquo s (CLINT) CY6U -3.54% manager announced a non-renounceable preferential equity fund raising (EFR) to raise $150.1 million. The new units will be priced at $1.06 and in the ratio of 119-for-1,000 and works out at 12.1% of current unit base.

 

Separately, on December 29, 2022, CLINT&rsquo s manager had announced a private placement to its sponsor CapitaLand Investment of 23.22 million new units at $1.0765 to rase $25 million, completed on May 11 this year. The proceeds were used to partially fund the acquisition of Ascendas IT Park, Pune.

 

For the upcoming $150.1 million EFR, approximately $56.0 million (which is equivalent to approximately 37.3% of the gross proceeds of the EFR) will be used to part finance the development and construction of Block A of International Tech Park Hyderabad (ITPH &ndash Block A). Around $91.2 million (or 60.8% of the EFR) will be used to part fund the extension aVance A1, HITEC City, Hyderabad and Gardencity, Hebbal, Bangalore.

The development and construction of aVance A1 and Gardencity are ongoing, and comprises forward funding to the developers of the project. In return, CLINT will receive coupon rates of at least 11%, CLINT&rsquo s manager says. The remaining monies will be used for fees and expenses.

 

Part of the reason CLINT has been able to provide unitholders with growing DPU despite the annual 1.5% to 2% decline in the value of the Indian rupee versus the Singapore dollar is the trust&rsquo s business model which incorporates Forward Purchase Agreements.

 

These agreements allow CLINT to secure 6 development projects in Bangalore and Hyderabad, while also allowing unitholders to enjoy an income stream from the coupons during the development period. In addition, yields on these properties tend to be higher than for CLINT to acquire stabilised income-producing assets.

Both aVance A and Gardencity are expected to complete in 2HCY2024. The manager says these buildings will drive income growth, and &ldquo will increase the portfolio size of CLINT by 13% from approximately 19.2 million sq ft to approximately 21.8 million sq ft&rdquo .

 

Meanwhile, the lease contracts of ITPH &ndash Block A have built-in rent escalation clauses that would give rise to incremental rental income, and rental reversions upon the renewal of expiring leases across the existing portfolio.

 

In addition, both Hyderabad and Bangalore &ldquo are currently witnessing rental growth arising from healthy demand from global blue chip tech companies,&rdquo the manager says. As part of prime minister Narendra Modi&rsquo s Make in India strategy, India is benefiting from global dislocations and friend-shoring.

 

The sponsors have provided irrevocable undertakings to subscribe to their pro rata stake in CLINT.

 

Following CLINT&rsquo s announcement (late on the night of June 16), its unit price fell by 4 cents to $1.09. Citi has a buy recommendation with a price target of $1.25 for CLINT. Based on its DPU of 8.19 cents in FY2022, CLINT&rsquo s trading yield is 7.5%, slightly higher than India&rsquo s 10-year government bond yield of 7.034% yield.

 

CAPITALAND India Trust&rsquo s (Clint) distribution per unit (DPU) rose 9 per cent to 3.91 Singapore cents in the six months ended Dec 31, 2022, its trust manager reported on Monday (Feb 6).

 

This brings its DPU for FY2022 to 8.19 Singapore cents, a 5 per cent increase from the year before.

 

Total property income for H2 grew 15 per cent to 6.2 billion rupees (S$107.3 million), resulting in a 12 per cent rise for the full year to 11.9 billion rupees. The Singapore dollar appreciated by about 3 per cent against the rupee during the year, Clint&rsquo s manager noted.

 

It said the increase in total property income was mainly attributable to higher portfolio occupancy and income at several buildings acquired in the last two years.

 

Total property expenses increased 22 per cent to 2.5 billion rupees, mainly due to higher operational and maintenance expenses and property management fees from existing and newly acquired properties, the manager added.

 

Net property income rose 11 per cent to 4.8 billion rupees for H2, while the figure for the full-year was 10 per cent higher at 9.4 billion rupees.

 

Meanwhile, portfolio occupancy increased to 92 per cent, from 87 per cent the previous year, said Sanjeev Dasgupta, chief executive of CapitaLand India Trust Management.

 

He added that the trust&rsquo s information technology (IT) park in Chennai saw the largest recovery in occupancy during the year to 92 per cent by December last year, up from 65 per cent the year before.

 

As at Dec 31, the trust&rsquo s assets under management stand at S$2.5 billion, while gearing ratio was 37 per cent.

 

On the whole, the manager said there has been &ldquo continuous improvement&rdquo in park attendance in H2.

 

It is anticipating that more tenants will return to offices in the coming months.

 

Clint was formerly known as Ascendas India Trust until late September last year. Its portfolio includes eight IT business parks, one logistics park, one industrial facility, and three data centre developments in India.

 

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THE trustee-manager of CapitaLand India Trust : CY6U -0.85% (CLINT) has entered into a forward purchase agreement to acquire a one million square foot (sq ft) IT park in Bangalore, India for 12.3 billion rupees (S$201 million).

 

The project at Outer Ring Road, Bangalore&rsquo s largest office micro-market, comprises two buildings with a total net leasable area of 1.5 million sq ft.

 

CLINT is proposing to fund the development of the project and subsequently acquire a net leasable area of one million sq ft, with the remaining net leasable area to be retained by the landowners.

 

The landowners have appointed CapitaLand Services (India) to oversee the design, development and leasing of the project.

 

CLINT&rsquo s investment in the construction of the project will be through debt and internal resources. The trustee-manager expects to use debt from H1 2024.

 

The estimated purchase price of 12.3 billion rupees includes funding for the project, which has a construction timeline spanning Q1 2023 to Q4 2025.

 

Upon completion of the one million sq ft development and fulfilment of other conditions, CLINT will fully acquire Ebisu Techpark, the entity that owns and will develop the building.

 

The project complements CLINT&rsquo s existing portfolio in Whitefield (International Tech Park Bangalore) and Hebbal (Gardencity), offering tenants options across micro-markets, said the trustee-manager.

 

The micro-market represents 44 per cent of Bangalore&rsquo s absorption and has low vacancy. Outer Ring Road is one of the preferred locations for multinational tenants including Google, Amazon, Goldman Sachs and JPMorgan, it added.

 

With the acquisition, CLINT&rsquo s portfolio size (inclusive of committed investment pipeline) will increase by 3.6 per cent from about 28 million sq ft to around 29 million sq ft.

Sanjeev Dasgupta, CEO of the trustee-manager of Clint, is positioning the S-Reit to seize opportunities emerging from India&rsquo s data centre and IT sectors. 

 

Amid a " general nervousness" in the market, Sanjeev Dasgupta, CEO of CapitaLand India Trust, is optimistic about India' s growth trjectory. 

IT HAS been a busy couple of months for CapitaLand India Trust : CY6U 0% (Clint).

 

At a time when most of its Singapore-listed real estate investment trust (S-Reit) peers have seen muted activity due to uncertainty from surging inflation and interest rates, Clint is on the warpath.

 

&ldquo If you read some of the research coming out in the last three months &ndash be it Morgan Stanley, Goldman Sachs or McKinsey &ndash they all seem to be thinking that India will be one of the strongest growth markets in the world,&rdquo said Sanjeev Dasgupta, chief executive officer of Clint&rsquo s trustee-manager.

 

And Dasgupta is wasting no time in ensuring that Clint is positioned to capture that growth.

 

Building clout in cloud

 

In December 2022 alone, Clint signed two deals to expand its data centre footprint in India.

 

First, it inked a memorandum of understanding (MoU) with the Telangana government to develop a 250,000 square foot (sq ft), 36 megawatt (MW) data centre at its International Tech Park Hyderabad (ITPH) in Madhapur.

 

Then, Clint announced the acquisition of a four-acre freehold site in Ambattur, Chennai to develop a data centre with a power capacity of 55 MW.

 

&ldquo India&rsquo s four biggest data centre markets are Mumbai, which is almost 65-70 per cent of India&rsquo s data centre market, followed by Bangalore, Chennai and Hyderabad. So the important thing for us in our strategy was to create a foothold in all these four markets,&rdquo Dasgupta said.

 

The way Dasgupta sees it, the data centre market in India is &ldquo poised for takeoff&rdquo .

 

Some of the reasons for this, he said, are the increased use of data by mobile phone users in India and the strong growth in cloud adoption by Indian companies.

 

&ldquo The government itself is digitalising India at a rapid pace,&rdquo he added. &ldquo The payment infrastructure that is building up in India today is probably the second largest in the world. And, of course, the other important thing is the government is insisting that consumer data is retained in India.&rdquo

 

Dasgupta foresees that data centres could account for close to 15 per cent of Clint&rsquo s portfolio in the next five years.

 

Business parks are expected to continue to be the mainstay of its portfolio, at about 75 per cent, with logistics and industrial assets making up the remaining 10 per cent.

 

Value in business parks

 

Just before the year was up, Clint also announced the proposed acquisition of International Tech Park Pune, Hinjawadi (ITPP-H) to add to its business parks portfolio. ITPP-H sits on 25 acres of land, with 2.3 million sq ft of leasable premium office space and amenities spread across four buildings.

 

And a month earlier, in November, Clint entered into a non-binding term sheet with Indian property developer L& T Realty to develop nearly 6 million square feet of prime office space across Bengaluru, Chennai and Mumbai.

 

&ldquo One of the reasons we&rsquo ve been rapidly looking at deals in the business park space is that our portfolio is seeing very strong leasing and renewal activity,&rdquo Dasgupta said. &ldquo There&rsquo s a general nervousness among other developers, so we are finding very good value right now in the business park space.&rdquo

 

Amid the wider macroeconomic uncertainty, Dasgupta believes his confidence in the Indian business park sector is well placed.

 

&ldquo We&rsquo ve been in India for about 27 years, which is a really long time. We have a very well entrenched tenant base, and many of our tenants have been with us for 10, 15, 20 years&hellip So when we talk to them about their business, we get some serious and genuine insights about what kind of growth they expect to achieve,&rdquo he said.

 

This long execution history, he added, is a key reason for Clint&rsquo s ability to &ldquo judge the market correctly&rdquo .

 

In addition, while there are concerns over layoffs by big tech companies globally, Dasgupta opines that this could be a boon for the India market.

 

Riding on tech challenges and opportunities

 

&ldquo If you look at what we&rsquo ve seen in the past&hellip the need to save costs on technology actually becomes more acute during financial crises,&rdquo Dasgupta said. &ldquo So we actually think that we&rsquo re going to see a similar trend this time also, that more work will get outsourced to India by large tech companies to save on development costs.&rdquo

 

&ldquo We are in a market that&rsquo s seeing good growth and there&rsquo s hardly any other opportunity to participate in a real estate investment trust (Reit) in India except for us,&rdquo he added. &ldquo Also, a linkage to Temasek through CapitaLand is extremely valuable in terms of corporate governance. In my view, (Clint) is an opportunity to partake in a high growth market with high governance.&rdquo

 

One of the main challenges Clint faces, however, is the rise of work-from-home trends over the past few years.

 

As at end-September 2022, physical occupancy at Clint&rsquo s business parks stood at 43 per cent, up from 5 per cent the year before.

 

Dasgupta explained that a significant portion of the workforce in India&rsquo s tech sector was made up of migrant workers from other cities. When companies were doing large scale work from home during the Covid-19 pandemic, many of these workers had relocated back to their hometowns.

 

&ldquo Bringing them back (to the office) has taken time,&rdquo Dasgupta said.

 

In addition, he said companies were more flexible about work-from-home arrangements during the pandemic in order to retain workers as there was a boom in the IT services sector during Covid-19 that led to a big increase in the demand for talent.

 

&ldquo But now, we are seeing companies pushing their employees very hard to come back because one of their big challenges has been attrition they found it much harder to manage attrition when people are working from home,&rdquo Dasgupta said.

 

Based on conversations with its tenants, Dagupta said physical occupancy is expected to rise to 70-75 per cent by the second quarter of 2023.

 

&ldquo I&rsquo m pretty encouraged by the fact that companies are pushing employees to come back. That should drive up growth for the demand for office space,&rdquo Dasgupta said. &ldquo The Indian IT services sector has hired lots and lots of new employees in the last two to three years. Actually, if everybody came back to work, then there&rsquo ll be a shortage of office space.&rdquo

THE trustee-manager of CapitaLand India Trust : CY6U -1.71% has signed a memorandum of understanding with the government of India&rsquo s Telangana state to develop a data centre in Hyderabad.

 

The data centre, to be situated at the trust&rsquo s eight-hectare International Tech Park in Madhapur, will have a built-up area of approximately 250,000 square feet and 36 megawatts of power capacity. Madhapur is a suburb of Hyderabad and is known as a centre for information technology activity. 

 

Approximately INR1,200 Crores (S$210 million) is expected to be deployed in the next three to five years for this project, CapitaLand India Trust Management said in a filing on the Singapore bourse on Tuesday (Dec 6).

 

The centre will be developed with the latest cooling and security technologies, and will include a dedicated gas insulated substation. &ldquo Its technologically advanced specifications will allow it to serve hyperscale players and large enterprises in the region,&rdquo the trustee-manager said.

 

This is the trust&rsquo s second data centre development project in India, following its acquisition of a greenfield data centre development site in Navi Mumbai in 2021.

 

CapitaLand India Trust chief executive officer Sanjeev Dasgupta said the trust has another two data centre projects planned in two key markets. He noted that Telangana is known for its ease of doing business, infrastructure and investment-oriented initiatives, and that CapitaLand India Trust will continue to strengthen its portfolio with &ldquo high-quality new economy assets&rdquo .

 

Shri K.T. Rama Rao, India&rsquo s minister for information technology, industries, and municipal administration and urban development, said Hyderabad is one of the fastest-growing data centre markets in India. &ldquo The investment adds to the pace we look to keep up,&rdquo said the minister, who was present at the signing.

 

CAPITALAND India Trust : CY6U +0.9% (Clint) has tied up with Indian property developer L& T Realty to develop nearly 6 million square feet of prime office space across Bengaluru, Chennai and Mumbai in India.

 

Clint will acquire these properties in a phased manner, both parties said in a joint press statement on Monday (Nov 7). They have inked a non-binding term sheet for a commercial platform.

 

L& T Realty will build and develop the office spaces, while Clint markets them. The latter&rsquo s manager expects the majority of the capital commitment for the projects to start in the second half of 2024.

 

L& T Realty is the real estate arm of Mumbai-headquartered conglomerate Larsen and Toubro (L& T), which has businesses in the construction, hydrocarbon, power, minerals and metals, heavy engineering, defence and mining sectors, to name a few.