CapitaLand India Trust (CLINT) has entered into a forward purchase agreement with Phoenix Group to acquire IT buildings in HITEC CIty in Hyerabad, India.

The assets feature a total leasable area of 2.5 million square feet.

HITEC City is a major IT and office hub with many large multinational companies, said CLINT in its 3 May statement to announce the acquisition.

As part of the forward purchase arrangement, CLINT will provide funding of INR2.15 billion (SGD34.68 million) to refinance the existing loan and receive interest on the funding at a rate which is higher than its borrowing cost.

CLINT will also provide funding in future towards development of the buildings and acquire the buildings at a price to be determined as and when each building is constructed and leased up to 90%.

The acquisition is attractive as its capitalisation rate is higher compared to the market’s capitalisation rates, said the trust.

It's expected to increase CLlNT’s earnings and distributions for unitholders.

Pro forma net profit from the buildings is forecasted to be approximately SGD4.5 million on a stabilised basis.

Meanwhile, pro forma distribution per unit is expected to increase from 6.45 cents to 6.47 cents, the trust added.

CLINT was last done on the Singapore Exchange at SGD1.03.

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.