MCT to acquire Mapletree Business City Phase II for $1.55b

It will increase MCT’s DPU by 4%.

Mapletree Commercial Trust (MCT) has proposed to acquire Mapletree Business City Phase 2 (MBC II) at Pasir Panjang Road from Heliconia Realty, a subsidiary of Mapletree Investments, for $1.55b, an announcement revealed.

Also read: Mapletree Commercial Trust joins the Straits Times Index

MCT’s trustee DBS Trustee and subsidiary 80 Alexandra entered into a conditional share purchase agreement to acquire 100% of the shares of Mapletree Business City. .

Including related expenses, the total acquisition is estimated to cost around $1.58b, which MCT intends to fund through a combination of debt and equity, and in part from net proceeds raised from the issuance of 500 million new units in MCT

The acquisition will consolidate MCT’s ownership over Mapletree Business City Development that includes MBC I acquired in 2016, completing MCT’s control over Alexandra Precinct which includes the PSA Building, the release added.

It is also expected to increase MCT’s distribution per unit (DPU) by 4% and net asset value (NAV) per unit by 2.2%, with a projected NPI yield of about 5% upon acquisition compared to MCT’s 4.7%. MCT Management CEO Sharon Lim added that it will enlarge the company’s asset size to $8.9b from $7.4b.

Also read: MBC 2 buy could boost Mapletree Commercial Trust's FY2020 DPU by 2.8%

MBC II has a net lettable area (NLA) of about 1.2 million sqft and comprises four blocks of business park space as well as the common carpark, multi-purpose hall, retail area and common property of Mapletree Business City Development.

It boasts a committed occupancy of 99.4% as of August, and around 97% of leases by NLA are embedded with average annual rental step-ups of about 2.3%. The property also houses the Asia Pacific headquarters of Google.