Mapletree REIT to Acquire Google APAC HQ in S$1.55B Singapore Biz Park Buy

The manager of Mapletree Commercial Trust has agreed to acquire Google’s Asia Pacific headquarters in Singapore as part of a S$1.55 billion ($1.14 billion) purchase of four buildings in the city’s Pasir Panjang area.

Mapletree Commercial Trust Management, in an announcement to the Singapore stock exchange on Friday, said that it had agreed to acquire the second phase of the Mapletree Business City office development from the trust’s sponsor, Mapletree Investments, in a move which adds 1.2 million square feet (111,484 square metres) of office space to the Singapore-listed REIT’s portfolio.

The announcement comes amid a flurry of acquisitions by Singapore-listed property trusts over the past month, including the $1.37 billion acquisition of a set of North American data centres by a separate Mapletree managed REIT less than two weeks ago.

Buying Half of the Largest Biz Parks in Singapore

Under the terms of the agreement, the trustee of the REIT and a subsidiary will acquire 100 percent of the equity in entities which hold the properties for a total cash consideration of S$884.9 million. At the purchase price, Mapletree Commercial Trust, which is managed by an affiliate of Mapletree Investments, is paying the equivalent of S$1,292 per square foot of lettable area in the asset, not taking into account fees, stamp duty or other costs.

With the set of properties valued at S$1.55 billion, Mapletree Commercial Trust is taking on responsibility for another S$665 million in debt associated with the assets, with the deal also carrying an acquisition fee of S$7.8 million payable to the REIT manager in units of the trust, as well as stamp duty and other professional fees of S$18.1 million.

The manager will finance the purchase through the net proceeds of a sale of to 500 million new units in the trust, with the balance to be funded by a drawdown of existing and new loans of up to an aggregate amount of S$800 million.

While the structure and timing of the equity fund raising has yet to be determined, post-acquisition distributions per unit are forecast to increase 4 percent to 9.51 cents, and net asset value per unit is expected to increase 2.2 percent to S$1.65.

Selling Google’s Singapore Home

Completed in 2016, Mapletree Business City is one of the largest grade A office spaces in Singapore, with a net lettable area of just under 2.9 million square feet across its two phases.

Google recently relocated its Asia Pacific headquarters to the phase two of the project, taking up 680,000 square feet, equivalent to 57 percent of the overall net lettable area. Occupancy rate in the four building complex stands at 99.4 percent with a weighted average lease expiry of 2.9 years.

Based on an average passing rent of S$6.15 per square foot per month, the complex offers an annual rental income of roughly S$88,028,600, giving a gross yield of 5.6 percent, according to Mingtiandi calculations.

Zoned for use as a business park with a gross plot ratio of 2.8, the property’s 99-year leasehold is due to expire on 1 October 2096.

According to an investor presentation submitted to the stock exchange, the REIT manager highlighted the asset’s steady rental growth, low volatility, and high quality tenants as key acquisition reasons for the acquisition.

Singapore REIT Shopping Spree Continues

Amid favourable interest rates, Singapore real estate investment trusts have been on a shopping spree over the past month.

Just seven days ago, Manulife US REIT raised $142.7 million through a private placement and preferential offering to fund the acquisition of a grade A office building in California.

Less than a week before that equity raise, in a joint announcement Mapletree Investments and Mapletree Industrial Trust announced that they had agreed to together acquire a portfolio of 13 data centres in North America from Digital Realty for $1.37 billion.

Just one day later, Keppel DC REIT announced that it was set to acquire a pair of Singapore data centres in a pair of transactions totalling S$585.1 million from two separate joint ventures invested by other divisions of Keppel Corporation.