Mapletree Industrial Trust Proposes Acquire Tokyo Freehold Mixed Use Property Jpy145 Bil
Mapletree Industrial Trust (MINT) has announced its proposal to purchase a multi-storey mixed-use facility in Tokyo, Japan for JPY14.5 billion ($129.8 million). This acquisition will be made under a conditional trust beneficiary interest purchase and share agreement with Nagayama Tokutei Mokuteki Kaisha, a third-party vendor. Through this structure, MINT will hold an effective economic interest of 98.47% in the property, with an acquisition cost of JPY14.9 billion. The remaining amount required for the purchase will be funded by MINT’s sponsor, Mapletree Investments.
Built in October 1992, the building is situated on freehold land spanning approximately 91,200 square feet. The property has a total gross floor area of about 319,300 square feet.
The facility features a range of spaces, including a data centre, back office, training facilities, and an adjacent accommodation wing that has the potential to be developed into a multi-storey data centre. The property is currently 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 option for the tenant to renew.
MINT explains that the property’s strategic location presents an opportunity for future redevelopment that will add value. With the constraints on land and power in Japan and the need for greater redundancy, end-users and data centre operators have expanded into new data centre clusters across Greater Tokyo. As a result, West Tokyo has become a significant submarket, accounting for approximately 40% of the total live IT supply in the Greater Tokyo market.
According to MINT’s manager, there is strong demand, and limited supply growth in the data centre space, which is expected to grow at a Compound Annual Growth Rate (CAGR) of 9.3% from 2023 to 2033. This information comes from DC Byte’s Japan data centre market report for this year. The report also notes that the vacancy rate is projected to decrease to 6% by 2033, from 9% in 2023 and 23% in 2018.
In addition, the proposed acquisition allows MINT to capitalize on opportunities in Japan, which has over 5,000 megawatts of total IT supply and is Asia-Pacific’s third-largest data centre market.
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After the acquisition, MINT’s freehold properties will account for 65.9% of its portfolio, up from 65.8% as of June 30. Its portfolio will also see an increase in value, growing to $9.1 billion in assets under management (AUM), up from $9.0 billion as of the same period. The acquisition will also enhance 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 properties in Singapore and North America will account for 47.3% and 46.3%, respectively.
Based on historical pro forma figures, the proposed acquisition and its financing method are expected to increase MINT’s distribution per unit (DPU). The manager intends to finance the total cost by taking out Japanese yen (JPY)-denominated loans to provide a natural capital hedge. As a result, MINT’s aggregate leverage ratio is projected to increase to 39.8% from 39.1% as of June 30.
The purchase price represents a discount of approximately 3.3% to the property’s valuation of JPY15.0 billion, which was independently valued by JLL Morii Valuation & Advisory K.K.
The proposed acquisition is expected to be completed by the fourth quarter of 2024.
