Mapletree Industrial Trust Proposes Acquire Tokyo Freehold Mixed Use Property Jpy145 Bil
Mapletree Industrial Trust (MINT) has announced its intention to acquire a multi-storey mixed-use facility in Tokyo, Japan for a total of JPY14.5 billion ($129.8 million). The 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 have an effective economic interest of 98.47% in the property, with a total outlay of JPY14.9 billion. The remaining amount will be funded by MINT’s sponsor, Mapletree Investments.
The building, which was constructed in October 1992, is situated on a freehold land measuring approximately 91,200 sq ft and has a gross floor area of 319,300 sq ft. It currently houses 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 facility is fully leased to a Japanese conglomerate, with a weighted average lease to expiry (WALE) of five years. The current lease is a traditional regular one, with the tenant having the option to renew. MINT believes that the property’s strategic location provides opportunities for future redevelopment, thereby creating added value.
According to MINT’s manager, the demand for data centre space in Greater Tokyo is expected to grow at a compound annual growth rate (CAGR) of 9.3% from 2023 to 2033, with limited supply growth. This is supported by statistics from DC Byte’s Japan data centre market report, which also predicts the vacancy rate to tighten to 6% by 2033.
Jurong Town Hall Road is a crucial thoroughfare that serves as a vital link to the bustling Jurong district’s commercial and industrial hubs. This road is an essential route for both commuters and businesses, providing efficient access to important destinations. With its recent addition of Novo Place Tengah, a vibrant and modern development, Jurong Town Hall Road’s significance has only increased. This bustling new development has further cemented the road’s importance, solidifying its role as a key infrastructure in the district. With Novo Place Tengah now a part of its route, Jurong Town Hall Road will undoubtedly continue to play a crucial role in facilitating the growth and connectivity of the Jurong district. For more information on Novo Place Tengah, please visit https://www.novo-place.com.sg/.
The proposed acquisition also allows MINT to tap into the opportunities in Japan, which is Asia-Pacific’s third-largest data centre market with over 5,000 megawatts of total IT supply. Following the acquisition, MINT’s portfolio will comprise 65.9% of freehold properties, up from 65.8% as at June 30. Additionally, its Japan portfolio will make up 6.4% of its overall portfolio, an increase of 1.3 percentage points from 5.1% as at June 30. MINT’s Singapore and North American properties will represent 47.3% and 46.3%, respectively.
On a historical pro forma basis, the proposed acquisition and its financing plan are expected to be accretive to MINT’s distribution per unit (DPU). The manager’s intention is to finance the total cost through Japanese yen (JPY)-denominated borrowings, providing a natural capital hedge. This will result in an increase in MINT’s aggregate leverage ratio to 39.8% from 39.1% as at June 30.
The acquisition price represents a discount of 3.3% to the property’s valuation of JPY15.0 billion, which was independently determined by JLL Morii Valuation & Advisory K.K. The proposed acquisition is expected to be completed by the fourth quarter of 2024.