Mapletree Industrial Trust (MINT) has revealed plans to acquire a multi-storey mixed-use facility in Tokyo, Japan for JPY14.5 billion ($129.8 million). The proposed acquisition will be carried out through a conditional trust beneficiary interest purchase and share agreement with Nagayama Tokutei Mokuteki Kaisha, a third-party vendor. Under this structure, MINT will hold an effective economic interest of 98.47% in the property, with a total cost of JPY14.9 billion. The remaining balance of the purchase consideration will be covered by MINT’s sponsor, Mapletree Investments.
Built in October 1992, the building stands on a freehold land area of approximately 91,200 sq ft. It has a gross floor area of about 319,300 sq ft, including a data centre, back office, and training facilities, as well as an adjacent accommodation wing that has the potential to be redeveloped into a multi-storey data centre. The facility 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 tenant having the option to renew.
According to MINT, the property is strategically located, offering potential for future redevelopment that would create added value. The company cites the expansion of end-users and data centre operators into new data centre clusters in Greater Tokyo, due to land and power constraints and the need for greater redundancy. 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.
With limited supply growth and strong demand, the data centre space is expected to see a compound annual growth rate (CAGR) of 9.3% from 2023 to 2033, according to MINT’s manager, citing data from DC Byte’s Japan data centre market report for 2021. The same report also projects a decrease in the vacancy rate from 9% in 2023, to 6% by 2033 and 23% in 2018.
The proposed acquisition also presents opportunities in Japan, which is home to over 5,000 megawatts of total IT supply, making it the third-largest data centre market in Asia-Pacific (APAC).
Following the acquisition, MINT’s portfolio will consist of 65.9% freehold properties, up from 65.8% as of June 30. Its portfolio will also increase to $9.1 billion in assets under management (AUM), up from $9.0 billion as of the same period. This will improve MINT’s geographical diversification, with its Japan portfolio increasing by 1.3 percentage points to 6.4%, from 5.1% as of June 30. Singaporean and North American properties will then represent 47.3% and 46.3%, respectively.
On a historical pro forma basis, the proposed acquisition and its financing method are expected to be accretive to MINT’s distribution per unit (DPU). The manager intends to finance the total cost with Japanese yen (JPY)-denominated borrowings, providing a natural capital hedge. This will result in MINT’s aggregate leverage ratio increasing to 39.8% from 39.1% as of June 30. The purchase consideration represents a discount of approximately 3.3% to the property’s valuation of JPY15.0 billion, which was independently performed by JLL Morii Valuation & Advisory K.K.
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The proposed acquisition is expected to be completed by the fourth quarter of 2024.