Mapletree Industrial Trust to finance S$1.8bn acquisition via equity fund raising

• Mapletree Industrial Trust (SGX: ME8U) share price closed at S$2.76 on Wednesday (19 May 2021)
• The industrial real estate investment trust (reit) called for a trading halt on Thursday
• It then announced its intention to acquire 29 US data centres for a purchase consideration of roughly S$1.8 billion
• The deal is expected to be distribution per unit (DPU) and net asset value (NAV) accretive
• Buy and sell MIT stocks with an IG account

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Mapletree Industrial Trust (MIT) has proposed the acquisition of 29 US data centres.

The industrial reit called for a trading halt before the market opened on Thursday, ahead of the announcement.

MIT shares closed at S$2.76 a share on Wednesday.

The counter is down 4.5% year to date. Analyst sentiments published by SGX StockFacts show a consensus rating of ‘outperform’ and average target price of S$3.12 on the stock.

The price target represents an upside of 13% from MIT’s last traded price.

Mapletree proposes US$1.32 billion data centre acquisition

Mapletree Industrial Trust Management Ltd., the manager of MIT, said in a bourse filing that it has entered into a purchase and sale agreement with certain subsidiaries of Sila Realty Trust, Inc. to acquire 29 data centres located in the US for a purchase consideration of US$1.32 billion (S$1.78 billion).

The aggregate valuation of the properties was US$1.34 billion (approximately S$1.8 billion) as at 30 April 2021. The purchase consideration is at a discount of approximately 1.1% to the valuation.

Including other fees and expenses of approximately US$25.1 million (S$33.9 million), the total acquisition cost is estimated to be around US$1.35 billion (S$1.82 billion).

The acquisition, to be completed in the third quarter of 2021, is expected to be DPU accretive and NAV per unit accretive to unitholders.

After the acquisition, DPU could rise to S$0.1297 from S$0.1255, based on an accretion rate of 3.3%. NAV per unit could rise to S$1.76 from S$1.66.

Post-acquisition, MIT’s portfolio of data centres will increase from S$2.8 billion as at 31 March 2021 to S$4.6 billion, making it one of the largest owners of data centres among reits listed in Asia Pacific.

Equity fund raising to partially finance acquisition

Mapletree Industrial Trust Management Ltd. also proposed an equity fund raising of new units in MIT to raise gross proceeds of no less than approximately S$800 million.

This will first be by way of a private placement of 190.26 million new units at an issue price of between S$2.628 and S$2.696 per new unit. This will raise roughly S$500 million.

A non-renounceable preferential offering of 117.58 million new units will also be offered to eligible unitholders at an issue price of between S$2.57 and S$2.64 per new unit. This will raise approximately S$300 million.

The private placement issue price range represents a discount of between approximately 1.5% and 4% to the adjusted volume weighted average price (VWAP) of S$2.74 per unit.

The preferential offering issue price range represents a discount of between approximately 3.6% and 6.1% to the adjusted VWAP of S$2.74 per unit.

MIT’s manager intends to use S$726.5 million of the gross proceeds to partially finance the total acquisition outlay of the 29 data centres.

Approximately S$62.2 million will be used to repay MIT’s debt, and approximately S$14.3 million will be used to pay the estimated fees and expenses associated with the equity fund raising.

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