MAPLETREE INDUSTRIAL TRUST BUYS OSAKA DATA CENTRE

Publishing Date: May 26, 2023

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Mapletree Industrial Trust (MIT) is acquiring a new data centre in downtown Osaka, Japan, for 52 billion yen (S$503.8 million), marking its entry into the Japanese market for such assets.

The Osaka property sits on around 45,280 sq ft of land, with gross floor area of about 143,500 sq ft and net lettable area of about 136,900 sq ft.

Construction and the first phase of fitting-out works have been completed, and the building is expected to be fully fitted by May 2025.

It is also fully leased to a data centre operator, with a weighted average lease to expiry of about 20 years, said MIT’s manager on Thursday.

The transaction structure, which was done through a wholly owned unit of MIT and an unrelated third-party vendor, Suma Tokutei Mokuteki Kaisha, will result in MIT acquiring an effective interest of 98.47 per cent in the property.

The acquisition is also expected to be distribution per unit-accretive and net asset value per unit-accretive to unit holders, at a rate of 2.1 per cent and 0.5 per cent respectively, said the manager.

The trust intends to finance the total acquisition outlay of about 51.8 billion yen through a combination of debt and equity. About $195.7 million will be funded through a private placement, it announced in a separate statement on Thursday.

MIT said it intends to raise $200 million via issuing about 92.6 million new units at an issue price of between $2.16 and $2.212 per unit to fund the Osaka transaction. The remaining $4.3 million will be used for paying fees and expenses incurred by the fund raising.

The issue price range represents a discount of between 2.6 per cent and 4.9 per cent to the volume-weighted average price (VWAP) of $2.2706 per unit.

Against the adjusted VWAP of $2.2458, the issue price range is a discount of roughly 1.5 per cent to 3.8 per cent.

The new units are expected to be issued on June 6.

Mr Tham Kuo Wei, chief executive of the manager, said the proposed acquisition offered an opportunity for the trust to diversify its data presence into Japan – which it believes is one of the most developed data centre markets in the Asia-Pacific.

It will enlarge our presence in the resilient data centre sector, which continues to offer attractive growth prospects,” he said.

 

The addition of a high-quality data centre with its long-term lease to an established data centre operator will provide a stable income stream and strengthen MIT’s tenant base.

Post-acquisition, Japan will account for about 5.5 per cent of MIT’s portfolio by assets under management. North America and Singapore will represent the remaining 47.6 per cent and 46.9 per cent respectively.

The property has a 70-year land lease which began on Oct 1, 2020. Acquisition of the asset is expected to be completed by the third quarter of 2023.

Additionally, MIT’s manager said it would be declaring an advance distribution for the period from April 1 to the date immediately prior to the date on which the new units are issued. The distribution is estimated to be between 2.38 cents and 2.58 cents.

A further announcement on the actual quantum of distribution per unit will be made by the manager in due course.

It said the advance distribution is intended to ensure that “the distribution accrued by MIT up to the day immediately preceding the date of issue of the new units pursuant to the private placement is distributed only in respect of the existing units, and is being proposed as a means to ensure fairness to holders of the existing units”.

The new units will, upon issue, rank pari passu – on an equal footing – in all respects with the existing units, other than in respect of the advance distribution.

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