Mapletree Investments has boosted its capital management portfolio with the closing of a new Australia-focused private trust at A$654 million ($447 million) in total equity, according to an announcement from the Temasek Holdings-backed real estate firm.
MASCOT Private Trust, which is fully invested, has been seeded with ten grade A office assets from the company’s existing portfolio across Sydney, Melbourne, Adelaide, Brisbane and Perth which together have an asset value of A$1.4 billion.
MASCOT attracted investment from institutional investors, including pension funds, insurance companies, regional banks and corporates, as well as high net worth individuals and family offices, according to the announcement.
Although further details of the trust’s investors have not been released, Mapletree’s S$1.3 billion student housing trust, which closed two years ago, received investment from investors including Great Eastern Life Assurance Company, DBS Bank and UBS AG.
Mapletree Retains 27% Stake
“The successful closing of MASCOT is a testament to the strong confidence that investors have in Mapletree’s fund management and real estate capabilities,” said Hiew Yoon Khong, Mapletree’s group chief executive officer. Hiew went to explain that Mapletree’s syndication of MASCOT is in line with the company’s focus on being an active capital manager in both the public and private funds markets.
Mapletree will retain a 27 percent stake in the trust to keep its interests aligned with those of its partners — a practice which the company also follows for its other private funds and its four Singapore-listed REITs.
With a term of five years and provision for two one-year extensions, MASCOT, which is managed by Mapletree Real Estate Advisors, a wholly-owned subsidiary of Mapletree Investments, targets an internal rate of return of 12 percent.
Assembling a Grade A Office Portfolio
MASCOT’s portfolio has a combined net leasable area of 160,000 square metres (1.7 million square feet) with an occupancy rate of 94 percent and a diversified list of tenants, including organisations from the government, TMT and mining, oil and gas sectors.
Mapletree had assembled the portfolio over a period of approximately five years, including 111 Pacific Highway in North Sydney, which it purchased in March for A$275 million as the most recent addition to the portfolio. The other nine assets include 11 Waymouth Street in Adelaide, a 20-storey office block with 31,000 square metres of net leaseable area which Mapletree acquired two years ago for A$202.5 million.
Targeting Australia’s Strong Fundamentals
Mapletree said in a statement that it is setting up the trust to take advantage of the prospects for commercial rents in Australia, which are expected to grow over the medium term due to a limited supply of grade A office properties in the country.
“The strong property and economic fundamentals are what attracted Mapletree’s entry into Australia in 2014,” said Hiew, adding that the company is optimistic about the performance of its Australian investments and will continue to grow its footprint in the country. In particular, the Mapletree CEO highlighted that the group would also be expanding its portfolio of logistics assets in Australia.
With S$55.7 billion in property assets under management, Mapletree holds 19 properties in Australia across the office, logistics and residential sectors, according to the company’s website.
Joining the Flow of SG Funds into Aussie Assets
Mapletree has reached its latest funding milestone as investments by Singapore-based institutions and fund managers into Australia have surged over the past month.
Two weeks ago, SC Capital Partners entered a binding agreement to purchase the former St Kilda Road police complex in Melbourne for A$107 million ($73 million) with the fund manager planning to reposition the property for commercial office use.
Just three days before that deal, SPH REIT – a real estate investment trust sponsored by Singapore Press Holdings – agreed to buy a half stake in one of the largest shopping malls in Australia for A$670 million ($461 million).
A week before the SPH acquisition, a joint venture between GIC and Australian property group Charter Hall acquired a landmark office building 25 kilometres northwest of central Sydney. The JV paid A$415 million ($287 million) for the Jessie Street Centre in Parramatta, with Charter Hall taking a ten percent interest in the venture, according to sources familiar with the matter who spoke to Mingtiandi.