Mapletree Industrial Trust to buy $1.3bn US data centre portfolio

Mapletree Industrial Trust to buy $1.3bn US data centre portfolio
Image: Courtesy of Mapletree Industrial Trust

Singapore-listed real estate investment trust (REIT) Mapletree Industrial Trust (MIT) said Thursday it has entered into a purchase and sale agreement to acquire 29 data centres located across 18 states in the United States for US$1,32 billion (approximately S$1,782.0 million) from Sila Realty Trust, Inc..

”The proposed acquisition increases the geographical diversification of MIT’s data centre footprint and gains exposure to new established markets – Chicago, Los Angeles and Houston,” said the company in a statement.

“This portfolio acquisition will enable us to scale up our data centre presence significantly and diversify our footprint across key markets in the United States. Data centres remain resilient with attractive growth opportunities, which are underpinned by the acceleration of digitalisation, cloud adoption and e-commerce during the pandemic. The new portfolio will augment MIT’s portfolio with the increased freehold land component and long leases with embedded rental growth,” said Tham Kuo Wei, Chief Executive Officer of the Manager.

”This is in line with our strategic efforts to reshape the portfolio toward higher value uses. Data centres will increase to 53.6% of MIT’s assets under management from 41.2% as at 31 March 2021,” he added.

Mapletree Industrial Trust said the new portfolio is 87.8% leased to 32 tenants, including Fortune Global 500 corporations, NYSE / NASDAQ-listed companies and multinational companies with investment grade ratings.

The new portfolio has a long weighted average lease to expiry of 7.9 years, with only 1.7% leases expiring within the next three financial years. About 89.4%3 of leases in the new portfolio have annual rental escalations from 1.5% to 3.0%. They are primarily on triple net leases with all outgoings borne by the tenants.

With a total net lettable area of 3.3 million square feet, the 29 properties are predominantly sited on freehold land.

Following the completion of the proposed acquisition, freehold properties will increase to 65.8%5 of the enlarged portfolio (by land area) from 55.9% as at 31 March 2021.