Mapletree Industrial Trust (MIT)

Mapletree Trust eyes $260m Virginia real estate investment

15 September 2020 | Melanie Mingas

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Mapletree Industrial Trust (MIT) is looking to spend up to US$267 million to acquire a data centre and office in Virginia, USA.

According to the Singapore based real estate investment trust (REIT) it has entered into a sale, purchase and escrow agreement with a third party that will see it pay between $204.3 million and $266.9 million for the facility.

The proposed acquisition is in line with MIT’s investment strategy to acquire data centres beyond Singapore and increase its exposure to the US market.

Its formal announcement stated: “The Manager believes that the Proposed Acquisition will bring the following key benefits to Unitholders: Strategic Expansion in the Resilient Data Centre Segment; Increased exposure to a resilient asset class with growth opportunities; and Increased freehold component of MIT’s overall portfolio.”

MIT’s property portfolio currently comprises 87 properties in Singapore and 27 in North America through a JV with Mapletree Investments Pte Ltd. The properties span data centres, hi-tech buildings, flatted factories, business park buildings, stack-up/ramp-up buildings and light industrial buildings

The announcement continued: “The Proposed Acquisition is in line with the Manager's long-term strategy of focusing on property segments with future growth potential. Upon Completion, MIT's assets under management (AUM) will increase from S$6.6 billion as of 30 June to S$6.9 billion. Data Centres will increase from 38.5% as at 30 June to 41.0% of the portfolio. In particular, North American data centres are expected to account for 34.7% of MIT’s portfolio, up from 32.0% as at 30 June.”

The sale will be funded with proceeds from an equity fund raising and/or internal cash resources, depending on market conditions.

The new Virginia property is fully leased on a triple net basis with a balance lease term of more than five years to a multinational company with strong credit standing. The tenant will become the fifth largest in the MIT portfolio and, reducing MIT’s capex will cover all outgoings such as maintenance, tax and insurance charges.

On 1 September MIT completed the acquisition of a 60% stake in 14 US-based data centres.