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Mapletree Industrial Trust proposes to buy Tai Seng property for S$268.3m

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Mapletree Industrial Trust proposed on Thursday to buy 18 Tai Seng for S$268.3 million, possibly entirely by debt.

MAPLETREE Industrial Trust (MIT) plans to buy a mixed-use property at 18 Tai Seng St for an agreed property value of S$268.3 million from a unit of Mapletree Investments, a move that deepens its expansion of its Hi-Tech Buildings segment.

The Reit has not yet made a financial decision on how it will fund this proposed purchase, though it said it has debt headroom to fund the proposed acquisition entirely by debt.Spanning a gross floor area of 443,810 sq ft and located in Paya Lebar iPark, the nine-storey property has Business 2 industrial, office and retail components.

The property has a 30-year lease beginning in 2014, and a committed portfolio occupancy of 94.3 per cent with 44 tenants in such fields as medical technology, information and communications technology and automotive technology.

As at Sep 30, the actual occupancy rate was 87.4 per cent and all committed leases will begin progressively by Mar 1, 2019.As at Sep 30, the weighted average lease to expiry was about 3.6 years by gross rental income and 78 per cent of leases will expire in the financial year 2022/2023 and beyond. The passing rental rate is S$4.58 per square foot per month as at Sep 30.

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Following the acquisition, MIT's total assets under management will increase to S$4.7 billion, with High-Tech Buildings accounting for 42.7 per cent, up from 39.2 per cent based on Sep 30 statistics.

The total acquisition cost is S$271 million. This will comprise a consideration of S$75 million, a trustee's loan of S$156.8 million, the subscription of units in Marina Trust (which holds the property) for S$35 million, acquisition fees payable in units to the manager of S$2.7 million and some other fees of about S$1.5 million.

MIT's manager will make a final decision on whether to fund the outlay (besides the acquisition fee) entirely by debt financing or any combination of debt financing, an equity fundraising and/or internal cash resources "at an appropriate time", based on market conditions at that time.

At a transaction gearing of 100 per cent, this could bring its aggregate leverage to 38.7 per cent.

The purchase will be subject to approval by unitholders.

Chief executive of MIT's manager Tham Kuo Wei said in a statement: "This is a rare opportunity to acquire a unique integrated industrial development in the modern Paya Lebar iPark. With its excellent connectivity as well as a wide variety of food and beverage offerings and amenities, 18 Tai Seng is a choice location for tenants who are looking for high-quality business space in the city fringe."

MIT units closed unchanged on Thursday at S$1.91.