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Tuesday, February 6, 2024

CapitaLand India Trust Buys Three Industrial Projects in Chennai, India

One of the facilities at OneHub Chennai integrated industrial park. (Source: CapitaLand)

CapitaLand India Trust (CLINT) is acquiring three industrial development projects in Greater Chennai from a local builder as part of the Singapore property heavyweight’s pledge to ramp up investments in the city.

The REIT’s trustee-manager announced on Monday ↗ that it has entered into a forward purchase agreement with Casa Grande Group for the development of three facilities situated within CapitaLand’s OneHub Chennai industrial park south of the city’s central business district.

CLINT is paying a total of INR 2.68 billion ($32 million), to entirely fund the development and to provide partial backing for the leasing of the developments. Completion of the investment will happen in phases as Casa Grande finishes construction over the next four years.

The acquisition came less than a month after the REIT’s sponsor CapitaLand Investment (CLI) pledged to invest INR 45 billion ↗ ($540 million) in business parks, logistics and data centre developments in Chennai over the next five years as rising demand gives the city one of India’s fastest-growing real estate markets.

Bullish on Emerging Markets

CLINT will fund the projects in three phases and acquire the three facilities after they each complete a six-month stabilisation period. The trust is paying roughly INR 3,392 per square foot of the project’s total net leasable area of 790,000 square feet (73,390 square metres).

Sanjeev Dasgupta, CEO of CLINT’s manager

Casa Grande is commencing construction this month on the 19.65-acre (8-hectare) site and aims to complete the 480,000 square foot initial phase of the project in the first half of 2025. The remaining phases are to be completed two years later.

The three facilities are located within the 1,250-acre OneHub Chennai industrial park jointly owned by CapitaLand Development and its Japanese partners, Mizuho Bank and JGC Corp. The park is currently home to global manufacturers including Hitachi Automotive Systems and Yamaha Music.

Sanjeev Dasgupta, chief executive officer of CLINT’s manager, expects the trio of projects to strengthen the REIT’s industrial footprint in Chennai and sees the investment leveraging the city’s reputation as an emerging hub for electronics component manufacturers in South India.

“It will also enable us to offer our tenants high-quality facilities at OneHub Chennai, an established industrial township with plug and play infrastructure,” Dasgupta said. “With our forward purchase agreements, we have a pipeline of industrial assets at strategic locations, allowing us to capitalise on the growing demand from global companies looking to set up industrial facilities in India.”

By floor area, completing the acquisition will raise the industrial and logistics’ proportion of CLINT’s project pipeline to 14 percent from 12 percent currently, and boost its overall committed pipeline by 2.6 percent to 30.1 million square feet.

Partnership Extended

The acquisition builds on two earlier CLINT purchases of Casa Grande projects at Mahindra World City – an integrated business park less than 40 kilometers northwest of the OneHub industrial complex

On 19 December the REIT completed its INR 1.78 billion purchase of Casa Grande – Phase 2, a  330,000 square foot industrial project anchored by an unnamed global electronics manufacturer.

CLINT had completed its acquisition of the Casa Grande – Phase 1 in May 2022, with that 420,000 square foot facility leased to the same electronics maker. Both acquisitions were made on a forward purchase basis.

Also included in the trust’s Chennai portfolio are the International Tech Park Chennai (ITPC) and CyberVale business parks, as well as a 55 megawatt data centre development in Ambattur ↗ that will be operational next year.

That data centre project is set to receive an INR 11.5 billion investment boost from its sponsor as part of CLI’s INR 45-billion five-year investment plan for the city.

Chennai was the REIT’s third largest market in India in terms of rental income generation during 2023, trailing Bangalore and Hyderabad.

With S$3 billion in assets under management, IT parks make up 85 percent of CLINT’s  portfolio by floor space, with industrial and logistics assets accounting for 10 percent, and data centres holding the remaining 5 percent.

Kaylie Pferten
Kaylie Pferten
A pilot of submersible crafts in a former life, now married to my husband David and writing about investment advice.

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