Mapletree Investments raises US$552m for maiden US office fund

Group chief executive Hiew Yoon Khong said Mapletree Investments intends to continue formulating new products for syndication.
Group chief executive Hiew Yoon Khong said Mapletree Investments intends to continue formulating new products for syndication.PHOTO: LIANHE ZAOBAO

SINGAPORE (THE BUSINESS TIMES) - Mapletree Investments has closed its maiden US office fund, Mapletree US Income Commercial Trust (Music), with US$552 million (S$745 million) in total fund equity raised.

In a statement on Thursday (Sept 23), the Temasek-owned company said Music's target internal rate of return (IRR) of 12 per cent represents both a yield plus growth total return from a resilient and income-generating portfolio.

Managed by Mapletree's wholly-owned subsidiary Mapletree Real Estate Advisors, Music is Mapletree's 12th private equity fund and the fifth in a series of fully seeded funds encompassing Europe and Australia commercial, Europe and US logistics, as well as student accommodation in Britain and the United States.

Its portfolio comprises five freehold Class "A" commercial properties with a total net lettable area (NLA) of 285,000 sq m with a total asset value of US$1.3 billion. It has a weighted average lease expiration of 8.8 years and an occupancy rate of about 96 per cent.

The trust is fully invested at closing and in line with the group's aim of structuring attractive investment products for a wide spectrum of investors, according to Mapletree.

It will make distributions on a semi-annual basis in US dollars across an initial term of five years, with provision for two one-year extensions.

In its statement, the group highlighted Music's diversified and quality tenant base, with significant exposure to the growth sectors of technology, media and telecommunications, as well as healthcare and pharmaceuticals.

Its office assets' locations in key growth cities across the US - Oakland, Raleigh, Dallas and Minneapolis - boast favourable socioeconomic and demographic profiles, in the group's view.

Mapletree said it will retain a 22 per cent stake in Music to maintain a strong alignment of interest with investors.

This is similar to the group's approach with other Mapletree-sponsored funds as well as its four Singapore-listed real estate investment trusts (Reits), namely: Mapletree Logistics Trust, Mapletree Industrial Trust, Mapletree Commercial Trust, and Mapletree North Asia Commercial Trust.

Music is the second new private fund to be closed by Mapletree this year after the group's €507 million (S$800 million) European office fund, Mapletree Europe Income Trust.

The closing of both funds raised US$1.2 billion and adds more than US$2.7 billion to Mapletree's assets under management (AUM) to date, bringing its AUM in the US to US$12.3 billion.

"Music's successful closing reflects the group's ability to source, acquire, manage and structure quality investment products that are aligned with investors' requirements and interests. It is also underpinned by the group's strong operations team of onshore asset and property managers," said Mapletree group chief executive Hiew Yoon Khong.

"Going forward, we will continue to formulate new products for syndication," he added.