Mapletree Investments has closed its maiden US office fund, Mapletree US Income Commercial Trust (MUSIC) with US$552 million ($745.2 million) in total fund equity.
In a media release by Mapletree on Sept 23, the group says strong participation was seen from new and repeat investors comprising pension funds, insurance companies, investment companies, asset managers and private banking clients.
The trust has a target internal rate of return (IRR) of 12%, which Mapletree says represents both a yield plus growth total return from a resilient and income-generating portfolio.
The trust’s funds have been fully invested as at closing. The MUSIC portfolio consists of five freehold Class A commercial properties with a total net lettable area of approximately 285,000 square metres (sqm) and a total asset value of approximately US$1.3 billion ($1.8 billion).
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The office assets are located in key growth cities across the US, namely Oakland, Raleigh, Dallas and Minneapolis, which boast favourable socioeconomic and demographic profiles.
The MUSIC portfolio has a weighted average lease expiration of 8.8 years, with an occupancy rate of approximately 96%. According to Mapletree, the assets’ tenant base has significant exposure to the growth sectors of technology, media, and telecommunications, as well as healthcare and pharmaceuticals.
Hiew Yoon Khong, Mapletree’s group CEO, highlights that Mapletree’s assets under management (AUM) in the US currently stands at US$12.3 billion across a range of asset classes such as commercial, data centres, logistics, student housing and lodging.
“MUSIC’s successful closing reflects the group’s ability to source, acquire, manage and structure quality investment products that are aligned with investors’ requirements and interests. It is also underpinned by the group’s strong operations team of onshore asset and property managers. Going forward, we will continue to formulate new products for syndication,” he says.
In line with Mapletree’s economic, social and governance (ESG) strategy, the buildings in MUSIC’s portfolio are focused on ensuring the health and well-being of tenants; obtaining green building certifications; and implementing sustainable operations including green lease adoptions.
The trust will make distributions on a semi-annual basis in US dollars across an initial term of five years with provision for two, one-year extensions. It will be managed by Mapletree Real Estate Advisors, a wholly-owned subsidiary of Mapletree.
Mapletree will retain a 22% stake in MUSIC, similar to its approach with other Mapletree-sponsored private funds, and its four Singapore-listed real estate investment trusts (REITs).
This is the second fund Mapletree has closed this year. In March, the group raised EUR507 million ($806.1 million) for Mapletree Europe Income Trust (MERIT), a European office fund. MUSIC and MERIT collectively added more than US$2.7 billion of AUM with US$1.2 billion of total fundraise.
MUSIC will be Mapletree’s 12th private equity fund and the fifth in a series of fully seeded funds which encompass Europe and Australia commercial, Europe and US logistics, as well as student accommodation in the United Kingdom and US.
Photo: Mapletree Investments
