Singapore’s Mapletree Buys Minneapolis Office Tower for $259M

Minnesota’s record-breaking spell of arctic weather may have prompted a state of emergency last month, but it didn’t stop Singapore’s Mapletree from venturing into the midwestern US state for a major property deal.

The US unit of the real estate group has purchased 50 South Sixth, a 29-storey office tower in downtown Minneapolis, from Hines Global REIT for $258.5 million. The transaction closed on December 20, according to a certificate of real estate value cited by Minnesota business publication Finance and Commerce.

The deal is one of the largest-ever acquisitions of a downtown property in the city, after China’s HNA Group scooped up 33 South Sixth Street (City Center) just across the street for $315 million in 2016.

Mapletree Buys a Piece of Downtown Minneapolis

Completed in 2001, the grade A tower is located at Sixth Street on the Nicollet Mall, a pedestrian and shopping street in the city’s downtown core. The Skidmore, Owings & Merrill-designed building is the 18th-tallest in Minneapolis and spans 698,606 square feet (64,903 square metres) of grade A space.

Mapletree Investments, which is backed by Singapore’s Temasek Holdings, purchased 50 South Sixth via its subsidiary Mapletree US Management LCC, paying the equivalent of about $370 per square foot. Houston-based Hines Global REIT had purchased the building in 2010 from Germany’s KanAm Grund for $180 million, after the latter acquired it from Sixth & Nicollet in 2005. The local county estimated the building’s market value at $145 million in 2018 for tax assessment purposes.

The tower in the US’ most arctic major city is about 93.4 percent leased by tenants including law firms Dorsey & Whitney and Stinson Leonard Street, BMO Harris Bank and consultancy Deloitte, according to data from CoStar. Stinson Leonard Street recently took up 108,000 square feet on a 16-year lease, which is said to have boosted the property’s value, creating an opportune moment for the disposal.

Mapletree’s deal represents one of the highest prices ever paid for a property in the Twin Cities market of Minneapolis and Saint Paul, topped in recent years only by Hainan-based HNA Group’s purchase of 33 South Sixth Street in November 2016. The acquisitive mainland conglomerate bought the 50-storey tower, the fourth tallest building in Minneapolis, from San Francisco’s Shorenstein Properties — and reportedly may soon put its North Star State asset on the market again as the company looks to reverse a $6 billion global deal spree.

Singaporean Firm Builds US Presence

Mapletree is not new to Minneapolis, having bought a trio of residential properties in the city from Kayne Anderson Real Estate Advisors as part of a North American portfolio deal in June 2017. Through that transaction, Mapletree acquired eight student housing assets and four multi-family assets primarily in the US, including two student communities located near the University of Minnesota in Minneapolis.

Also included in Mapletree’s earlier deal was Latitude 45, a 318-unit luxury apartment project on downtown Minneapolis’ Washington Avenue. The sale formed part of a $1.6 billion series of transactions with Kayne Anderson since November 2016, as Mapletree expands its overseas portfolio.

The Singaporean giant has acquired a taste for other niche property assets abroad, buying a portfolio of 18 data centres in the US for $750 million last October in partnership with Mapletree Industrial Trust (MIT), a listed vehicle it manages. As of March 2017, Mapletree owns and manages S$39.5 billion ($28.3 billion) of properties across a wide range of asset classes worldwide.