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Mapletree Investments, MIT to acquire North America data centre portfolio

MAPLETREE Investments and Mapletree Industrial Trust (MIT) are set to acquire a North America data centre portfolio worth US$1.37 billion from data centre provider Digital Realty.

Mapletree Investments and MIT have formed a 50:50 joint venture (JV) to buy 10 powered shell data centres (called the Powered Base Building data centres) from Digital Realty for US$557.3 million.

The JV will also enter into a venture with Digital Realty to co-invest in three existing Digital Realty fully fitted hyperscale data centres (called the Turn-Key Flex data centres) for US$810.6 million.

The JV between Mapletree Investments and MIT, called Mapletree Rosewood Data Centre Trust, will have an 80 per cent interest in the Turn-Key portfolio.

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The 13 properties comprise 2.1 million square feet of total net lettable area on predominantly freehold land located across six states in the US, with one property in Toronto, Canada. Six properties are concentrated in Northern Virginia, the world's largest data centre market.

The data centres are wholly leased to nine established tenants, with a long weighted average lease to expiry of 9.1 years, by gross rental income.

About 92.2 per cent of leases by gross rental income have fixed annual rental escalations of 2 per cent or more. 91.5 per cent is derived from triple net leases whereby all outgoings are borne by tenants.

Digital Realty will continue to manage the data centres for a one-year transition period. 

The acquisition will be financed through a combination of debt and equity. The total acquisition cost for MIT is US$694.5 million, and the proposed debt financing includes external onshore loans.

If required, MIT and Mapletree Investments will provide a unitholder's loan to the JV, pending the finalisation of the external onshore loans.

The final decision regarding the proportion of debt and equity has not been made.

Hiew Yoon Khong, group CEO of Mapletree, said: "We have deepened our presence in the fast-growing data centre sector with our second portfolio acquisition in North America. This portfolio acquisition adds high-quality properties in key data centre markets underpinned by global cloud and colocation players."

The Turn-Key portfolio JV is expected to be completed in late-2019 while the acquisition of the powered shell data centres is expected to be completed in early-2020. 

The entry into the JV by MIT constitutes an interested person transaction, while the subscription of units by MIT in relation to the JV constitutes an interested person transaction and interested party transaction.

MIT closed flat at S$2.33 on Monday.