SINGAPORE (Sept 27): Mapletree Commercial Trust (MCT) is acquiring Mapletree Business City (Phase 2) and the adjacent common premises Pasir Panjang Road in Singapore from a direct wholly-owned subsidiary of sponsor Mapletree Investments for $1.58 billion, including acquisition-related expenses.
The agreed property value, arrived at on a willing-buyer and willing-seller basis after taking into account two independent valuations, was $1.55 billion.
MCT intends to fund through a combination of debt and equity.
Together with Mapletree Business City (Phase 1), which was acquired by the trustee in 2016, this will see MCT consolidate its ownership over the entire Mapletree Business City Development.
The accretive acquisition will see MCT dominate the 13.5-hectare Alexandra precinct, which lies just outside Singapore’s central business district in the Queenstown Planning Area.
MBC II has a total net lettable area (NLA) of approximately 1.2 million sq ft and comprises four blocks of business park space. The acquisition also includes the common carpark, multi-purpose hall, retail area and common property including the landscape areas driveways and walkways of Mapletree Business City Development.
The property, which is home to the Asia Pacific headquarters of Google, boasts a high committed occupancy of 99.4% as at Aug 31.
Around 97% of leases by NLA are embedded with average annual rental step-ups of approximately 2.3%.
The property is expected to be acquired at a net property income (NPI) yield of approximately 5.0%, which is higher than MCT’s existing portfolio’s NPI yield of approximately 4.7%.
Hence, the acquisition is therefore expected to increase MCT’s pro forma DPU and NAV per unit by 4.0% and 2.2%, respectively.
“Similar to the acquisition of MBC I in 2016, our unitholders can expect this transaction to deliver both financial and long-term value. It will boost MCT’s NPI, DPU and NAV per unit, and enlarge its asset size from $7.4 billion to $8.9 billion,” says Sharon Lim, CEO of the manager.
“As the Singapore government has also announced plans to revamp the Greater Southern Waterfront into a new coastal ‘live-work-play’ precinct, our deeper presence in the Alexandra/HarbourFront micro market makes MCT a prime beneficiary of the urban transformation,” she adds.
The completion of the acquisition is subject to approvals from MCT’s unitholders at an extraordinary general meeting to be held on Oct 15 as well as a successful equity fund raising.
Units in MCT closed 1.3% higher at $2.36 on Thursday.
