The manager of Ascendas India Trust (a-iTrust) has entered into a forward purchase agreement with the Casa Grande Group to acquire two industrial assets, or Phase 2 of the Casa Grande project, located at Mahindra World City, Chennai. The trust will also provide funding for the development of the Phase 2 Project as part of the forward purchase arrangement.
This is in addition to the earlier forward purchase transaction announced on Mar 5, 2021 for a 0.42 million sq ft fully leased industrial facility, or Phase 1 of the Casa Grande project, within the same micro-market. The acquisition of Casa Grande – Phase 1 was completed on May 27.
The Phase 2 Project consists of two industrial facilities with net leasable area totalling 0.31 million sq ft. a-iTrust proposes to fund the development of the Phase 2 Project and subsequently acquire both facilities. The construction of Casa Grande – Phase 2 is expected to be completed by the second half of 2023 and acquisition will be completed after a stabilisation period of 12 months for leasing.
Pursuant to the deal structure, a-iTrust shall provide funding of INR 650 million ($11.6 million) towards the development of the Phase 2 Project. Upon completion of the Phase 2 Project and fulfilment of other key conditions, a-iTrust shall acquire all of the issued share capital of Chengalpattu Warehousing Parks, the entity developing the Phase 2 Project.
The total purchase price for the Phase 2 Project, computed based on an agreed formula, is expected to be INR 1.6 billion, which includes non-convertible debentures to be issued by Chengalpattu Warehousing Parks
According to the trust, this transaction will support its efforts to diversify in the industrial space, establish itself in a well-known location, as well as improve its earnings and distributions for unitholders.
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As a result of the acquisition of Casa Grande – Phase 2, a-iTrust’s portfolio size (inclusive of committed investment pipeline) will increase by 1.2% from approximately 25.0 million sq ft to approximately 25.3 million sq ft.
Sanjeev Dasgupta, CEO of the trustee-manager says, “The full leasing of Casa Grande – Phase 1 validates our assessment of the demand for industrial assets in this location. The proposed Casa Grande – Phase 2 acquisition provides an opportunity to increase exposure to the industrial sector and expand our presence in Mahindra World City, a prime industrial corridor in Chennai.”
Units in a-iTrust closed flat at $1.13 on July 14.
