Hi Folks, welcome back to Investment Income for Life! I want to do a quick post on my thoughts on the recently announced logistics facility by Capitaland Ascendas REIT ("CLAR"). I am somewhat not very pleased with the recent acquisition and I should elaborate further below.
On June 4, 2026, CLAR announced that it is strengthening its presence in Singapore by acquiring 5 Tuas Avenue 5, a modern seven-storey ramp-up logistics property, for a purchase consideration of S$133.9 million from Hup Hin Transport Co Pte Ltd. The purchase price reflects a 1.5% discount to the independent market valuation of S$136.0 million, bringing the estimated total investment cost to S$136.5 million after factoring in the manager's acquisition fee and transaction expenses. The asset features high-quality modern industrial specifications, including direct ramp access for 40-foot container trucks up to the sixth floor, a clear floor-to-ceiling height of up to 13 meters, and a heavy floor loading capacity of up to 30 kN per square meter across its 50,160 square meters of gross floor area.
Strategically located near the Tuas Mega Port, Jurong Port, and the Tuas Second Link, the property is currently 100% occupied by four tenants under a triple-net lease structure. It features a stable five-year weighted average lease expiry (WALE) with a built-in 2.0% annual rental escalation. Financed via a combination of debt and net proceeds from an April 2026 equity fund raising, the acquisition is slated for completion in the second half of 2026. On a pro forma basis, it is expected to be distribution per unit (DPU) accretive by approximately 0.2% (0.033 Singapore cents) while delivering an attractive first-year net property income (NPI) yield of 6.5% post-transaction costs.
The Skeptic's View: Why I'm Cautious on Singapore Logistics Assets
Ok, that's all from me for today. Have a great week ahead!
Despite the seemingly stable metrics of this specific acquisition, I remain highly cautious about increasing exposure to the Singapore logistics and warehousing sector in the current economic climate. Look at Mapletree Logistics Trust, its market price performance has been a great disaster for the past 2 years.
This was a far cry from the COVID and post COVID initial years. From my own personal experience, warehouse rental rate then were hitting over S$2.00 per sqft and I remembered extremely stressed up over my warehouse lease renewal- It was a landlord's market then! Then suddenly, it is going for as low as S$1.60- S$1.90 per sqft at Joo Koon, Pioneer, Benoi, Penjuru etc. This is the listing price on Commercial Guru. If you bargain hard enough, one can easily shave off another 10 cents off per sqft to as low as S$1.50 per sqft. Some of the warehouse landlords may even be willing to throw in a migration package that includes the sponsor of the booking of trailers and hauliers to move your existing cargo to their warehouse if you decided to change warehouse.
Parting Thoughts
I am just wondering whether CLAR should focus entirely on acquisition of data centres or other industrial properties rather than logistics warehousing facility. So I do not really like this latest addition to the CLAR family. I can only say that the good thing is that this acquisition is small in scale and does help in diversification of its business risks.
Ok, that's all from me for today. Have a great week ahead!
(Note: I am currently still holding on to all my CLAR units in my investment portfolios.)
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