The Data Infrastructure Gambit: Inside CapitaLand India Trust’s Record Distribution Surge

In a global economy defined by volatility and the constant recalibration of interest rate expectations, the search for resilient, high-yield property investments has become a hunt for specialized ecosystems. For CapitaLand India Trust (CLINT), the answer lies at the intersection of traditional business space and the exploding demand for digital infrastructure. Listed in 2007 as the first Indian property trust in Asia, CLINT has navigated nearly two decades of market cycles. However, its FY 2025 results represent more than just steady performance; they signal a strategic evolution. By pivoting toward hyperscale data centres and mastering the art of “onshoring” debt, the Trust is addressing a fundamental investor problem: how to generate sustainable, outsized returns in a shifting landscape.

A Masterclass in Distribution Growth

The primary financial headline from CLINT’s latest reporting is a striking 22% year-on-year surge in 2H 2025 Distribution per Unit (DPU) to 3.90 Singapore cents. For the full year, DPU reached 7.87 Singapore cents—a 15% increase—offering unitholders a compelling 6.5% distribution yield.

From an investment strategy perspective, the mechanics behind this growth are as important as the numbers. The 33% year-on-year increase in income available for distribution (reaching INR 3,990 million for 2H 2025) was not merely a product of rising rents. A sophisticated driver was the higher interest income generated from its six forward purchases currently under development. This was bolstered by contributions from newly completed assets like MTB 6 in Bangalore and the Navi Mumbai data centre.

“We are pleased to report strong FY 2025 financial results, which reflect the team’s strategic focus and strong execution capabilities. The team’s disciplined efforts to strengthen operating margins, optimise capital management, unlock value through strategic divestments and developing a strong growth pipeline have been instrumental in achieving this solid performance in 2025.” — Mr. Manohar Khiatani, Chairman of the Trustee-Manager.

The Data Centre Pivot: Betting on Hyperscalers

CLINT is aggressively diversifying into the “digitalisation” theme by building a data centre pipeline with a 200 MW gross capacity. The momentum is tangible: Tower 1 of the CapitaLand Data Centre Navi Mumbai is now operational and undergoing handover to a global hyperscaler, while Tower 2 is already fully leased to the same tenant.

The Trust’s approach to capital recycling in this sector is particularly savvy. CLINT recently announced the divestment of a 20.2% stake in three data centres to the CapitaLand India Data Centre Fund for INR 7.02 billion (S$99.7 million). This was not a simple exit; the transaction was executed at a 13.7% premium to independent valuation. Crucially, CLINT secured participation rights for the Sponsor’s future data centre investments for up to 33.0%, ensuring it remains tethered to the long-term upside of India’s digital backbone while maintaining the financial agility to fund current developments.

Financial Engineering: The Onshoring Advantage

A standout feature of CLINT’s strategy is its “Onshoring Debt” initiative, which effectively reduces currency risk through a natural hedge. The centerpiece of this strategy was the January 2026 issuance of CLINT’s first AAA-rated onshore bond in India, totaling INR 9.15 billion. This was complemented by two onshore sustainability-linked loans totaling INR 21 billion (S$300 million).

This shift away from offshore Singapore Dollar loans provides three distinct technical advantages:

• Withholding Tax Elimination: Onshore debt attracts 0% withholding tax, a significant improvement over the 15% typically applied to offshore interest payments.
• Full Interest Deductibility: Unlike offshore structures where interest deductibility is often capped at 30% of EBITDA, onshore debt allows for full tax deductibility at the entity level.
• Direct DPU Accretion: By tapping into India’s lower interest rate environment for AAA corporate debt, CLINT estimates that the INR 9.15 billion bond alone will provide a +3.8% annual impact on DPU.

Pricing Power and the Tenant “Upgrade”

Despite broader questions about office demand, CLINT’s portfolio metrics remain robust. The Trust reported a committed occupancy of 91% and an impressive 21% rental reversion over the last 12 months.

However, the real insight lies in the contrast between this reversion and the 37% retention rate recorded for December 2025. This indicates that CLINT is not simply renewing existing leases; it is successfully “upgrading” its tenant base. By letting older leases expire and replacing them with new occupiers at significantly higher market rates, the Trust is capturing the premium demand for Grade-A space in tech hubs like Bangalore and Hyderabad. Looking ahead, the runway remains clear, with 35% of leases expiring in 2026 already renewed or highly likely to be.

Reconstituting the Portfolio for High-Yield Growth

CLINT is currently executing a strategic portfolio reconstitution, unlocking value from mature assets to fund its high-growth pipeline. This began with the inaugural divestment of older assets—CyberPearl in Hyderabad and CyberVale in Chennai—for INR 11.03 billion.

The capital from these sales is being funneled into a massive 7.3 million sq ft development pipeline. This “Forward Purchase” engine is already bearing fruit, with S381.6 million deployed into interest-bearing receivables across projects such as **Gardencity** and **Ebisu** in Bangalore. These receivables provide immediate interest income to the Trust even before the buildings are completed and officially join the S3.8 billion AUM portfolio.

“CLINT’s strong performance in FY 2025 reflects the momentum we have been generating across multiple growth engines. We continue to strengthen our portfolio and balance sheet by improving efficiencies, pursuing forward purchases and developments, and recycling capital through strategic divestments.” — Mr. Gauri Shankar Nagabhushanam, CEO of the Trustee-Manager.

The Future: Brick, Mortar, and Fiber

As CLINT moves into 2026, its growth trajectory is anchored by specific completion targets. Unitholders can look forward to the completion of Garden City Project I in the first half of 2026 and Ebisu Building I in the second half of the year. Meanwhile, the large-scale redevelopment of the Orion building in Hyderabad into a 1.0 million sq ft modern business space is scheduled for completion in 4Q 2028.

With a gearing ratio maintained at a healthy 39.6%, the Trust has the headroom to continue its dual-track expansion. The FY 2025 results suggest that the “new” business space is no longer just about physical desks, but about the power grids and fiber optics that sustain them. It raises a final, provocative question for the modern investor: as the boundaries between real estate and technology blur, is the most valuable “location” in the future a prestigious office address, or a rack in a hyperscale data centre? CLINT’s record year suggests the answer is a strategic hybrid of both.

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