Mapletree Industrial Trust (MINT) has announced its proposal to acquire a mixed-use facility in Tokyo, Japan for JPY14.5 billion ($129.8 million). The acquisition will be carried out through a conditional trust beneficiary interest purchase and share agreement with Nagayama Tokutei Mokuteki Kaisha, an unrelated third-party vendor. MINT will have an effective economic interest of 98.47% in the property, with an acquisition cost of JPY14.9 billion. The remaining balance of the purchase consideration will be funded by MINT’s sponsor, Mapletree Investments.
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Built in October 1992, the building sits on approximately 91,200 sq ft of freehold land and boasts a gross floor area of around 319,300 sq ft. Currently, the property is fully leased to a Japanese conglomerate with a weighted average lease to expiry (WALE) of five years. MINT’s manager states that the property’s strategic location presents a future redevelopment opportunity that will add value.
The facility includes a data centre, back office, training facilities, and an adjacent accommodation wing that has the potential to be turned into a multi-storey data centre. This is a prime opportunity for MINT as the data centre market in Greater Tokyo 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 for this year. The report also predicts a tightening vacancy rate of 6% by 2033, down from 9% in 2023 and 23% in 2018.
In addition, the proposed acquisition allows MINT to tap into the lucrative data centre market in Japan, which is the third-largest in the Asia-Pacific (APAC) region with over 5,000 megawatts of total IT supply. This will increase MINT’s freehold properties in its portfolio to 65.9%, up from 65.8% as of June 30. The REIT’s overall portfolio will also grow to $9.1 billion in assets under management (AUM), up from $9.0 billion as of the same period.
The proposed acquisition is expected to be accretive to MINT’s distribution per unit (DPU) on a historical pro forma basis, and the manager intends to finance the total cost through Japanese yen (JPY)-denominated borrowings to provide a natural capital hedge. This will slightly increase MINT’s aggregate leverage ratio to 39.8%, up from 39.1% as of June 30. The purchase price represents a discount of 3.3% to the property’s valuation of JPY15.0 billion, which was independently assessed by JLL Morii Valuation & Advisory K.K.
Geographical diversification will also be improved as MINT’s Japan portfolio will make up 6.4% of its total portfolio, up from 5.1% as of June 30. Its Singaporean and North American properties will represent 47.3% and 46.3% respectively. The proposed acquisition is expected to be completed by the fourth quarter of 2024.