Mapletree Trust Adds to US Data Centre Portfolio with $204M-Plus Virginia Buy

Singapore’s Mapletree Industrial Trust is adding to its collection of US data centres through an agreement to purchase a facility in Virginia for at least $204 million, the trust’s manager announced on Monday.

The unspecified server farm, which is believed to come from a $1.4 billion portfolio acquired one year ago by MIT and the SGX-listed trust’s sponsor, Mapletree Investments, comes fully leased to a multinational, according to the stock exchange announcement.

“The proposed acquisition is in line with MIT’s investment strategy to acquire data centres worldwide beyond Singapore,” the trust’s manager said, while noting that the acquisition would give unitholders greater access to the US market, where increased use of cloud computing and mobile devices are expected to boost demand for online services.

This latest acquisition was announced less than two weeks after MIT finished buying a 60 percent interest in a set of 14 US data centres from Mapletree Investments, giving it full ownership of that portfolio.

Adding a New Mega-Tenant

“The proposed acquisition will augment MIT’s tenant base with the addition of a new data centre tenant,” the trust’s manager said in explaining its investment rationale, adding that the occupier of its latest facility will become the fifth largest tenant in the portfolio and will account for 2.7 percent of gross rental income following completion of the deal.

In its statement the trust manager said that the total acquisition cost is expected to be between $204.3 million and $266.9 million, subject to what it called calibration of terms, without explaining further what elements of the deal might be adjusted. Of that amount, the purchase consideration is expected to be between $200.6 million and $262.1 million with the remainder going to fees and expenses.

The property, which also includes an office element, has been valued by Cushman & Wakefield at from $205 million to $266 million as of 31 August, with the deal expected to close in the first quarter of 2021.

The facility is fully leased to the sole tenant on a triple-net basis with more than five years remaining on the rental agreement. MIT’s managed said it plans to finance the acquisition through debt, proceeds from an equity sale, and/or internal resources.

Latest Step in $1.4B 2019 Deal

Mapletree Industrial Trust Management Ltd, which manages the $4.85 billion trust, said, “The proposed acquisition is in line with the manager’s long-term strategy of focusing on property segments with future growth potential.” Following the acquisition, MIT’s assets under management would reach $5.1 billion, with 41 percent of that in data centre assets, primarily in the US.

That strategy is also closely aligned with acquisitions by MIT together with Mapletree Investments, the Temasek Holdings-controlled developer and fund manager which controls the trust manager.

In September of last year Mapletree Investments together with MIT agreed to pay $1.4 billion to Digital Realty in a deal which included the purchase of 10 powered shell data centres in the US, along with majority stakes in three larger, hyperscale facilities in northern Virginia, according to announcements by the NYSE-listed REIT.

That deal with the US data centre REIT came after Mapletree Investments bought 14 US facilities from Digital Realty affiliate Carter Validus Mission Critical REIT in 2017, with those properties forming the basis for MIT’s earlier data centre purchase this year from its sponsor.

In the 2019 acquisition from Digital Realty a 50:50 joint venture between Mapletree and MIT purchased the 10 powered shell facilities for a total of $557 million, with three of those assets in northern Virginia, which serves the US government market.

Also as part of that transaction, a joint venture between Mapletree Investments and MIT acquired an 80 percent stake in a portfolio of three hyperscale properties in Ashburn, Virginia, with the Singaporeans paying $811 million for their ownership.

Under the terms of last year’s deal, Digital Realty is to continue to manage and operate all 13 of the data centres, which have never been publicly identified. According to a separate list published by the US firm it now has 16 facilities in the state, down from the 17 properties listed at this time last year.