Mapletree Industrial Trust Proposes Acquire Tokyo Freehold Mixed Use Property Jpy145 Bil

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Mapletree Industrial Trust (MINT), a Singapore-based real estate investment trust (REIT), has announced plans to acquire a multi-storey mixed-use facility in Tokyo, Japan for JPY14.5 billion ($129.8 million). The proposed acquisition will be made through a conditional trust beneficiary interest purchase and share agreement with Nagayama Tokutei Mokuteki Kaisha, an unrelated third-party vendor. MINT will hold an effective economic interest of 98.47% in the property, with an acquisition outlay of JPY14.9 billion. The remainder of the purchase consideration will be funded by MINT’s sponsor, Mapletree Investments. The building, which was constructed in October 1992, is situated on freehold land measuring approximately 91,200 sq ft and has a gross floor area of around 319,300 sq ft. It includes a data centre, back office, training facilities, and an adjacent accommodation wing that has the potential to be redeveloped into a multi-storey data centre. The property is fully leased to a Japanese conglomerate with a weighted average lease to expiry (WALE) of five years. MINT sees this as a strategic location with potential for future redevelopment, adding value to the property. Data centre operators have expanded into new clusters in Greater Tokyo, resulting in West Tokyo becoming a larger submarket, accounting for approximately 40% of the total live IT supply in the Greater Tokyo market. This growth is expected to continue, with a CAGR of 9.3% from 2023 to 2033, according to DC Byte’s Japan data centre market report for this year. The report also predicts that the vacancy rate will decrease from 9% in 2023 to 6% in 2033, down from 23% in 2018. The proposed acquisition will also provide opportunities in Japan, which is the third-largest data centre market in the Asia-Pacific region, with over 5,000 megawatts of total IT supply. Following the acquisition, MINT’s portfolio will consist of 65.9% freehold properties, up from 65.8% as of June 30. Its portfolio is expected to grow to $9.1 billion in assets under management (AUM), from $9.0 billion as of the same date. This will also improve MINT’s geographical diversification, with its Japan portfolio increasing by 1.3 percentage points to 6.4%, from 5.1% as of June 30. MINT’s Singaporean and North American properties will represent 47.3% and 46.3%, respectively. Based on historical pro forma data, the proposed acquisition and its proposed method of financing will be accretive to MINT’s distribution per unit (DPU). The manager plans to finance the total cost through Japanese yen (JPY)-denominated borrowings to provide a natural capital hedge. This will result in an increase in MINT’s aggregate leverage ratio, from 39.1% as of June 30, to 39.8%. The purchase price represents a discount of approximately 3.3% to the property’s valuation of JPY15.0 billion, independently valued by JLL Morii Valuation & Advisory K.K. The proposed acquisition is expected to take place in the fourth quarter of 2024.