CapitaLand acquires 16 multifamily US properties for US$835 million

U.S. one-dollar currency notes; taken September 2018.U.S. one dollar bills.

CapitaLand has acquired a portfolio of 16 multifamily properties in the U.S. for US$835 million, or around S$1.14 billion, in a move to ride on growing demand for long-term rental housing, it said in an SGX filing before the market open on Tuesday.

The portfolio comprises 3,787 apartment units located in suburban communities of the metropolitan areas of Seattle, Portland, Greater Los Angeles and Denver, with a price per unit of US$220,000, which it said was consistent with market transactions, the filing said.

“These suburban regions have experienced growing employment rates and are home to government agencies, companies in the technology, energy, healthcare and life sciences industries, as well as multinational corporations such as Boeing, Microsoft, Starbucks, Amazon and Nike,” CapitaLand said.

The properties are considered Class B, or an older multifamily property with room for enhancement and which caters to middle-income tenants, it said. The properties are professionally managed and offer facilities including swimming pools and fitness centers, it said.

The multifamily sector in the U.S. has the highest average returns in the commercial real estate segment, with close to 10 percent average returns annually for the past three decades, CapitaLand said, citing data from real estate services firm CBRE.

“This latest acquisition in the U.S., the world’s biggest economy, would expand CapitaLand’s global investment portfolio, diversify our business outside of our two core markets of Singapore and China and allow us to grow new businesses,” Lee Chee Koon, president and group CEO of CapitaLand, said in the statement.

“It also enables us to diversify our investment property portfolio into developed markets as we continue to scale up our presence in our core emerging markets of China and Vietnam,” he said.

The deal, which will be funded by internal resources and will be satisfied in cash, is expected to be completed in the fourth quarter, it said.

The acquisition will more than double CapitaLand’s U.S. investment to over US$1.5 billion and raise its presence there to more than 6,500 units, it said.

The portfolio was acquired via CapitaLand’s wholly owned international unit CapitaLand International, it said.

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