Singapore-based real estate investment trust Mapletree Industrial Trust (MIT) has divested a data centre property in Michigan, United States, for a proposed sale price of 10 million USD.
Managed by Mapletree Industrial Trust Management Ltd., and sponsored by Mapletree Investments Pte Ltd., MIT’s property portfolio includes data centres, high-tech buildings, business park buildings, flatted factories, stack-up/ramp-up buildings, and light industrial buildings. MIT’s principal investment strategy in Singapore is to invest in a diversified portfolio of income-producing industrial real estate.
Beyond Singapore, MIT’s principal investment strategy is to invest in income-producing real estate and related assets, used primarily in data centres around the globe.
On June 10, the manager, director, and Chief Executive Officer of MIT, Tham Kuo Wei, announced that MIT had entered into a sale and purchase agreement with an unnamed third party purchaser for the proposed divestment, which was completed on June 9, US eastern standard time.
The data centre which MIT divested of is a four-storey data centre situated on freehold land with a land area of around 121 122 square feet, with a net lettable area of around 52 940 square feet.
Divestment in Best Interest of Unitholders
In December 2017, MIT had acquired the data centre property through a 40:60 joint venture with Mapletree Investments, before acquiring the remaining 60% interest in 2020.
Tham noted that the occupancy rate of the data centre had remained unchanged at 74.3%, since the facility was first acquired in 2017. He did not expect that the occupancy rate would increase in the near term, after evaluating all viable options, especially with the relatively small land plot.
As such, divestment of the data centre was found to be in the “best interest” of unitholders.
Following a request for proposal process conducted in November 2021, the existing tenant at the data centre made the highest bid, and was selected as the successful bidder.
Funds from the divestment will be deployed to fund working capital requirements, and reduce existing debt for MIT.
Flourishing Data Centre Industry in Michigan
The divestment could possibly be attributed to the highly competitive data centre market in Michigan, especially since MIT’s divested data centre had a small land area and a relatively-small net lettable area.
Tham said that “the proposed divestment signifies our proactive efforts in the rejuvenation and rebalancing of MIT’s portfolio in the United States to improve portfolio quality.”