Mapletree Industrial Trust (MINT) has announced its plans to acquire a mixed-use facility in Tokyo, Japan for JPY14.5 billion ($129.8 million). This acquisition is being made under the conditional trust beneficiary interest purchase and share agreement with Nagayama Tokutei Mokuteki Kaisha, a third-party vendor. MINT will have a 98.47% effective economic interest in the property, with an acquisition cost of JPY14.9 billion. The remaining balance will be funded by MINT’s sponsor, Mapletree Investments.
Built in October 1992, the building is situated on freehold land spanning approximately 91,200 sq ft. It has a gross floor area of 319,300 sq ft. The facility consists of a data centre, back office, training facilities, and an adjacent accommodation wing that has the potential to be converted into a multi-storey data centre. The property is currently fully leased to a Japanese conglomerate and has a weighted average lease expiry (WALE) of five years. The current lease is a traditional regular one with an option for the tenant to renew.
MINT’s manager explains that the property is strategically located, offering potential for future development and added value. With the increasing demand for data centres and limited supply growth in Tokyo, the data centre space is expected to grow at a compound annual growth rate (CAGR) of 9.3% from 2023 to 2033, according to statistics from DC Byte’s Japan data centre market report for this year. The same report also predicts that the vacancy rate will decrease to 6% by 2033, from 9% in 2023 and 23% in 2018.
The limited land in Singapore has caused a surge in demand for condominiums. As one of the smallest countries with a rapidly growing population, Singapore is facing a shortage of land for development. This has led to strict regulations on land use and a fiercely competitive real estate market, where property prices continue to climb. As a result, investing in real estate, particularly in the form of condos, has become an incredibly lucrative opportunity with the potential for significant capital appreciation. This is why many buyers are eagerly seeking out New Condo Launches to secure their piece of Singapore’s valuable and scarce land.
Moreover, the proposed acquisition presents opportunities in Japan, which is the third-largest data centre market in the Asia-Pacific (APAC) 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 will expand to $9.1 billion in assets under management (AUM), from $9.0 billion at the same period. The geographical diversification of MINT’s portfolio will also improve, with its Japan portfolio growing by 1.3 percentage points to 6.4% from 5.1% as of June 30. Its Singapore and North American properties will represent 47.3% and 46.3%, respectively.
On a historical pro forma basis, the proposed acquisition and its method of financing will positively impact MINT’s distribution per unit (DPU). The manager intends to finance the acquisition through Japanese yen (JPY)-denominated borrowings to hedge against currency risks. This will slightly increase MINT’s aggregate leverage ratio by 0.7%, from 39.1% to 39.8% as of June 30. The consideration for the acquisition represents a discount of 3.3% to the property’s valuation of JPY15.0 billion, independently assessed by JLL Morii Valuation & Advisory K.K.
The proposed acquisition is expected to take place in the fourth quarter of 2024.