MIT posts 6% rise in Q2 DPU, acquires US data centres with sponsor for US$750m

IN a move to gain a strategic entry into the world's largest data centre market, Mapletree Industrial Trust (MIT) has teamed up with its sponsor Mapletree Investment to acquire a portfolio of 14 data centres in the US for US$750 million.

MIT announced this on Tuesday as it posted a 6 per cent rise in its distribution per unit (DPU) for the fiscal second quarter ended Sept 30 to three cents, on the back of revenue contribution from the build-to-suit project for HP Singapore and pre-termination compensation of S$3.1 million from Johnson & Johnson.

The maiden investment in the US provides a strategic entry into the largest and most established data centre market in the world, its Reit manager said on Tuesday.

This came as MIT announced last month a broadening of investment mandate from just Singapore industrial properties to include data centres worldwide.

For the purpose of this acquisition, a joint venture (JV) was formed between MIT and its sponsor Mapletree Investments.

Under the JV agreement, MIT will hold 40 per cent interest while Mapletree Investment will hold the other 60 per cent in the unlisted single purpose trust, Mapletree Redwood Data Centre Trust (MRDCT).

A conditional purchase-and-sale agreement was inked on Tuesday between MRDCT and the current owner Carter Validus Mission Critical Reit Inc to acquire the data centres.

The acquisition will be funded through a combination of equity and onshore debt financing.

On that note, MIT proposed on Tuesday a private placement of 68.3 million new units to institutional and other investors at between S$1.83 and S$1.90 per new unit to raise gross proceeds of up to S$125 million. This comes with an upsize option to issue up to 13.66 million new units to raise additional gross proceeds of up to S$25 million.

Some S$122.5 million of the gross proceeds will go towards partially funding MIT's share of the acquisition of the US data centres.

Upon completion of the acquisition, the US data centres will be held, directly and indirectly, through special purpose vehicles that are wholly owned by MRDCT and organised to qualify as Reits under US taxation laws.

Mapletree Investment has also granted MIT the right of first refusal to acquire its 60 per cent interest in the JV.