Mapletree Industrial Trust (MINT) has announced its plans to acquire a multi-storey mixed-use facility located in Tokyo, Japan for JPY14.5 billion ($129.8 million).
The acquisition will be made under a conditional trust beneficiary interest purchase and share agreement between MINT and Nagayama Tokutei Mokuteki Kaisha, an unrelated third-party vendor. MINT will hold an effective economic interest of 98.47% in the property, with an acquisition cost of JPY14.9 billion. The remaining cost will be funded by MINT’s sponsor, Mapletree Investments.
The building, which was constructed in October 1992, sits on freehold land spanning approximately 91,200 square feet. It has a gross floor area of around 319,300 square feet.
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The facility includes a data centre, back office, training facilities, and an adjacent accommodation wing that has potential for redevelopment into a multi-storey data centre. Currently, the property is fully leased to a Japanese conglomerate with a weighted average lease to expiry (WALE) of five years. The current lease is traditional, with the tenant having the option to renew.
MINT states that the property’s strategic location presents a valuable opportunity for future redevelopment. “With the constraints of land and power and the need for greater redundancy, end-users and data centre operators have expanded into new data centre clusters across Greater Tokyo. This has resulted in West Tokyo becoming a larger submarket, accounting for about 40% of total live IT supply in the Greater Tokyo market,” explains the REIT manager in its announcement on Sept 30.
With strong demand and limited supply growth, the data centre space in Japan 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 2021. The same report also predicts that the vacancy rate will tighten to 6% by 2033, down from 9% in 2023 and 23% in 2018.
The proposed acquisition also presents an opportunity in Japan, which boasts over 5,000 megawatts of total IT supply and is the third-largest data centre market in the Asia-Pacific (APAC) region.
After the acquisition is completed, MINT’s portfolio will consist of 65.9% freehold properties, up from 65.8% as of June 30. The portfolio will also grow to $9.1 billion in assets under management (AUM) from $9.0 billion during 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. MINT’s Singapore and North American properties will represent 47.3% and 46.3%, respectively.
The proposed acquisition and the planned method of financing are expected to be accretive to MINT’s distribution per unit (DPU) on a historical pro forma basis. The manager intends to finance the total cost through Japanese yen (JPY)-denominated borrowings to “provide a natural capital hedge”. This will increase MINT’s aggregate leverage ratio to 39.8% from 39.1% as of June 30.
The proposed acquisition has been valued at a discount of 3.3% to the property’s valuation of JPY15.0 billion. The property was independently valued by JLL Morii Valuation & Advisory K.K.
The acquisition is expected to take place in the fourth quarter of 2024.