Mapletree Industrial Trust (MINT) has announced its plan to acquire a multi-storey mixed-use facility with a data centre in Tokyo, Japan for JPY14.5 billion ($129.8 million). This proposed acquisition will expand MINT’s portfolio and increase its effective economic interest to 98.47% in the property. The remaining amount of the purchase consideration will be funded by MINT’s sponsor, Mapletree Investments.
The building, which was built in 1992, occupies approximately 91,200 sq ft of freehold land and has a total gross floor area of 319,300 sq ft. Currently, it is fully leased to a Japanese conglomerate with a weighted average lease to expiry of five years. The lease agreement gives the tenant the option to renew their lease.
According to MINT, the location of the property offers a promising opportunity for future redevelopment and added value. The growth of data centres in West Tokyo has resulted in an increased demand for data centre space in the area. In fact, the data centre space is expected to grow at a compound annual growth rate (CAGR) of 9.3% from 2023 to 2033, according to DC Byte’s Japan data centre market report. Additionally, the report predicts that the vacancy rate will decrease to 6% by 2033, down from 9% in 2023 and 23% in 2018.
The proposed acquisition also presents an opportunity for MINT to expand its presence in Japan, which has over 5,000 megawatts of total IT supply and is APAC’s third-largest data centre market. After the acquisition, MINT’s portfolio will grow to $9.1 billion, with 65.9% of freehold properties and a geographical diversification of 6.4% in Japan, 47.3% in Singapore, and 46.3% in North America.
On a historical pro forma basis, the proposed acquisition is expected to be accretive to MINT’s distribution per unit (DPU). The manager intends to finance the purchase with Japanese yen-denominated borrowings to hedge against foreign exchange risks. This will also increase MINT’s aggregate leverage ratio to 39.8% from 39.1%, as of June 30.
The acquisition is expected to be completed by the fourth quarter of 2024 and is subject to approval by MINT’s unitholders. The purchase price of JPY14.5 billion represents a discount of 3.3% to the property’s independent valuation of JPY15.0 billion by JLL Morii Valuation & Advisory K.K.