Proposed Acquisition of Seagate R&D Facility (The Shugart for S$218.2M)

[00:00:00] Acquisition Presentation: The Shugart (Seagate Singapore R&D Facility)

William Tay (CEO), Yeow Kit Peng (Head CM & IR)

William Tay opens the call and Yeow Kit Peng presents the proposed acquisition of the Seagate Singapore R&D facility for S$218.2 million, a 5.1% discount to its S$230 million valuation. The property is leased to Seagate for 10 years with a 2.5% annual escalation and a 10-year renewal option, at a 7.8% post-transaction NPI yield and 0.7% DPU accretion. It also outlines a European acquisition, logistics redevelopment, and debt repayment.

[00:00:00] William Tay (CEO):

“Thanks for joining us on this call for CapitaLand Ascentas REIT's, uh, briefing on the proposed acquisition of Seagate r and d facility.”

[00:11:46] Q&A - Question 1: 20-Year Lease Structure & Initial NPI Yield (Terence, J.P. Morgan)

Yeow Kit Peng (Head CM & IR), Terence (Analyst, J.P. Morgan), William Tay (CEO)

The floor opens for questions and Terence asks about the NPI yield for the European acquisition, the potential for a land tenure extension on the Seagate site, and funding cost. William Tay declines to give the NPI figure directly but points to the DPU accretion as an indicator, says no land-extension application has been made yet, and gives approximate funding-cost ranges for the Singapore and European deals.

[00:12:04] Terence (Analyst, J.P. Morgan):

“First, um, number one, could you share on, uh, what's the M P I yield for the European acquisition?”

[00:12:42] William Tay (CEO):

“if you look at the DPU accretion number, uh, you will get a sense of where it is”

[00:22:22] Q&A - Question 2: DPU Accretion (+0.7%) & Equity Placement Sizing (Dale Lai, DBS Bank)

Dale Lai (Analyst, DBS Bank), Khoo Li Sun (CFO)

Discussion continues on renewal reversion and occupancy before turning to questions on whether a Seagate redevelopment could proceed directly with JTC and whether the Seagate deal was an off-market transaction. Khoo Li Sun explains that JTC is the landlord for this asset, so any redevelopment approval runs through JTC, and confirms Seagate came through a request-for-proposal process rather than an off-market approach.

[00:22:22] Dale Lai (Analyst, DBS Bank):

“As you have seen, our renter renewal in terms of renter reversion has been strong occupancy.”

[00:23:01] Khoo Li Sun (CFO):

“I mean, in some of your, uh, science park assets, I think you cannot approach jtc, right?”

[00:32:22] Q&A - Question 3: Land Tenure Option & One-North Cluster Synergy (Derek Tan, DBS Bank)

Derek Tan (Analyst, DBS Bank), Ram (Head Investments)

Derek Tan asks about the process for extending land tenure in Singapore and how the acquisition will be funded and its effect on leverage. Ram explains that a 20-year lease can be tight for tenants with five-to-ten-year fit-out cycles, and management describes a transparent process for approaching JTC to extend tenure, with leverage improving to about 37.2% after the private placement funds both acquisitions.

[00:32:22] Derek Tan (Analyst, DBS Bank):

“we can approach JAC at the right time, uh, to extend the land tenure, and then we just have to pay for the, the extension.”

[00:33:02] Ram (Head Investments):

“if they are given a 20 year lease, because by the time they're able to dispose, uh, it's only left only 10 years.”

[00:39:49] Q&A - Question 4: Tenant Credit & CapEx Maintenance Clauses (Vijay Natarajan, RHB)

Vijay Natarajan (Analyst, RHB), William Tay (CEO)

Vijay Natarajan asks for the valuer's cap rate and whether the recent yield compression rules out sponsor asset acquisitions this year. Management indicates a 5% base cap rate for Singapore assets with a downward adjustment for the Seagate transaction, and says sponsor-asset discussions are ongoing with a hope for better pricing, without committing to a timeline.

[00:39:49] Vijay Natarajan (Analyst, RHB):

“given that the yield shopper, can we assume that there's, there won't be any sponsor asset acquisition this year?”

[00:40:35] William Tay (CEO):

“we are in discussion, so definitely we hope to see it, to see some, uh, uh, better pricing.”

[00:47:44] Q&A - Question 5: Sponsor Deployment Pace (Mervin Song, J.P. Morgan)

Mervin Song (Analyst, J.P. Morgan), William Tay (CEO)

Mervin Song asks about the logistics redevelopment timeline, upside sharing, and stabilized yield basis, then later questions cover the Seagate rental deposit, the portion of the private placement funding the European asset, and the debt to be repaid. Management confirms a roughly two-year redevelopment period, a 12-month rental deposit, partial funding for Europe, and describes recent segment losses as tied to one-off restructuring and settlement costs.

[00:47:44] Mervin Song (Analyst, J.P. Morgan):

“And development, uh, is about two years, you mentioned? Yes.”

[00:48:20] William Tay (CEO):

“And as they already pointed out, if they still continue rental growth, I think that's where all the upside is.”