Singapore REIT to Buy $99M Chicago-Area Industrial Portfolio

501 S. Steward Road in Rochelle, Ill. Image courtesy of CapitaLand

Singapore-based Ascendas Real Estate Investment Trust expects to make its second play in the U.S. industrial sector with the planned acquisition of a 1.4 million-square-foot logistics portfolio in metropolitan Chicago.

In an all-cash transaction valued at S$133.2 million, or $99 million, Ascendas REIT will purchase the collection of seven properties from BREIT Industrial HS Property Owner LLC, BREIT Industrial Canyon IL1M03 LLC, BCORE Jupiter NEMW 1 LLC and Icon Pac Owner Pool 4 Northeast/Midwest LLC, third-party vendors.

News of Ascendas REIT’s planned Chicago purchase comes six months after the company made its debut in the U.S. industrial market with the acquisition of an approximately 2.1 million-square-foot Kansas City portfolio for $156 million.

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“Prior to entering the U.S. logistics market, we have a logistics portfolio with properties located in Singapore, Australia and the U.K. The entry into the U.S. logistics market in November 2021 is an extension of Ascendas REIT’s growth strategy in developed markets,” a spokesperson for Ascendas Real Estate Investment Trust told Commercial Property Executive. “The acquisitions in both Kansas City and Chicago comprise well-located, last-mile assets that are 100 percent occupied, which will augment our portfolio.”

Amassing assets

Ascendas REIT’s new holdings in the Chicago area of Illinois will include the 43,300-square-foot facility at 3950 Sussex Ave. in Aurora, which is the smallest of the group, and the 579,600-square-foot property at 501 S. Steward Road in Rochelle, which is the largest in the collection.

540-570 Congress Circle S. in Roselle, Ill. Image courtesy of CapitaLand

The remaining assets in the portfolio consist of 540-570 Congress Circle S. in Roselle; 490 Windy Point Drive in Glendale Heights; 472 Thomas Drive in Bensenville; 13144 S. Pulaski Road in Alsip; and 2500 S. 25th Ave. in Broadview.

A total of 12 tenants from a diverse range of industries call the portfolio home. Additionally, all the properties are sited in infill industrial submarkets of the thriving Chicago industrial logistics hub. The industrial vacancy rate in metropolitan Chicago in the first quarter of 2022 was 3 percent, and positive net absorption exceeded 8.1 million square feet, according to a report by JLL.

Just getting started

Ascendas REIT’s planned Chicago acquisition will likely be followed by a string of additional industrial purchases in the U.S. Like many cross-border commercial real estate investors, the company is undaunted by the highly competitive investment environment in the U.S. industrial sector, which remains a favorite target among domestic and international buyers.

“Fueled by the pandemic, the logistics market has certainly been very competitive globally,” the Ascendas REIT spokesperson said. “Nonetheless, the U.S. is the largest industrial market in the world and there are a wide range of opportunities for us to source for functional and good quality logistics properties that offer good value.”

13144 S. Pulaski Road in Alsip, Ill. Image courtesy of CapitaLand

If all goes as planned, the Chicago transaction, which Ascendas REIT will finance through internal resources and/or existing debt facilities, will close in the second quarter of 2022. And from there, it’s on to more scouting and buying for Ascendas REIT.

“Including this latest portfolio of seven logistics properties in Chicago, our real estate portfolio in the U.S. is expected to be worth approximately $1.7 billion, comprising business spaces in tech cities—San Francisco, San Diego, Raleigh, N.C., Portland, Ore.—and logistics properties,” the spokesperson said. “We will continue to source for good quality properties in these asset classes to scale up and strengthen the portfolio.”

Ascendas REIT is managed by Ascendas Funds Management Ltd., a wholly owned subsidiary of CapitaLand Investment Ltd.