Mapletree Industrial Trust to acquire 60% interest in US data centre portfolio

Mapletree Industrial Trust to acquire 60% interest in US data centre portfolio

Mapletree Industrial Trust (MIT), a real estate investment trust (REIT) listed on the Main Board of Singapore Exchange, has announced that its trustee DBS Trustee Limited has agreed to acquire the remaining 60% interest in the 14 data centres in the United States currently held by Mapletree Redwood Data Centre Trust (MRDCT) for US$210.9 million (appr. S$299.5 million).

The agreed property value of the 14 data centres on a 60% basis is US$494.0 million (approximately S$701.5 million). MIT holds a 40% interest in MRDCT, with Mapletree DC Ventures Pte. Ltd., a wholly-owned subsidiary of Mapletree Investments Pte Ltd, holding the remaining 60% interest. Upon completion of the proposed acquisition, MIT will hold a 100% interest in the 14 data centres.

“The proposed acquisition increases our exposure to the resilient data centre segment and deepens our presence in the United States. The United States is the largest and most established data centre market in the world. It offers attractive growth prospects and is well supported by favourable supplydemand dynamics. The proposed acquisition will improve MIT’s income stability with the increased freehold land component and long leases with annual rental escalations,” said Tham Kuo Wei, Chief Executive Officer of the Manager.

All 14 data centres are 97.4% leased to 15 established tenants, including Fortune Global 500 corporations and NYSE-listed/Nasdaq-listed companies. The MRDCT Portfolio has a weighted average lease to expiry of about 4.6 years, with about 20% of the leases expiring
within the next three years. About 97.8% of the MRDCT Portfolio have annual rental escalations of 2% and above. They are primarily powered shell data centres on triple net leases with all outgoings borne by the tenants.

With a net lettable area of 2.3 million sq ft, the 14 data centres are sited on freehold land, which are strategically located in established data centre markets across the United States.

Following the completion of the proposed acquisition, freehold properties will increase from about 37.9% as at 31 March 2020 to 51.8% of the enlarged portfolio (by land area), said the company in a statement.

The proposed acquisition is in line with the Manager’s strategy to grow the Hi-Tech Buildings segment. Upon completion of the proposed acquisition, MIT’s assets under management will increase to S$6.6 billion from S$5.9 billion4 as at 31 March 2020.