- Targets Trust Return of 12% internal rate of return (“IRR”)
- Grade A office portfolio comprising seven assets with a total net lettable area (“NLA”) of ~270,000 square metres (“sqm”) in key European and United Kingdom (“UK”) cities
- Third party fundraise was approximately 1.5 times covered with strong participation from new and repeat investors comprising pension funds, insurance companies, investment companies, asset managers and private banking clients
SINGAPORE – Mapletree Investments Pte Ltd (“Mapletree” or “the Group”) is pleased to announce the successful closing of its latest office fund, Mapletree Europe Income Trust (“MERIT” or “the Trust”). With EUR507 million (~S$816 million1) in total fund equity, MERIT is fully invested at closing and consists of seven Grade A office properties totalling approximately 270,000 sqm at a total asset value of EUR1.2 billion (S$1.93 billion1).
Mr Hiew Yoon Khong, Mapletree’s Group Chief Executive Officer said, “Since 2015, when Mapletree expanded beyond Asia and entered markets such as Europe, UK and the United States (“US”), the Group has nearly doubled its assets under management and grew its funds under management by 50%2. The Group’s robust underwriting philosophy complemented with strong local asset management expertise have enabled us to continually source, structure and develop quality investment products. The successful fund raise of MERIT amidst the current Covid-19 pandemic demonstrates the confidence and endorsement that investors have in Mapletree’s fund management capability and track record. Investors of MERIT will benefit from a robust and stable income stream generated from a portfolio of high quality European commercial assets, anchored by long lease profiles.”
The syndication of MERIT is in line with Mapletree’s business model, which includes being an active capital manager in both the private and public markets. The Group constantly seeks opportunities to structure attractive investment products for a wide spectrum of investors, including pension funds, insurance companies, regional banks and corporates, high net worth and family office investors as well as retail investors.
The Trust will be managed by Mapletree Real Estate Advisors Pte. Ltd., a wholly-owned subsidiary of Mapletree. Mapletree will retain a 27 per cent3 stake in MERIT to align with investor interest, similar to its approach with other Mapletree-sponsored private funds, and its four Singapore-listed real estate investment trusts (REITs). MERIT will be Mapletree’s 11th private equity fund and the 4th in a series of fully seeded funds which includes Australia commercial, Europe and US logistics, as well as student accommodation in the UK and US.
Featuring seven high quality Grade A office assets that are strategically located in regional cities (e.g. Manchester, Bristol, Aberdeen, Warsaw, Munich, Dublin, and Utrecht) with vibrant innovation and service oriented ecosystems, the portfolio offers a well-diversified tenant base with a significant number of companies of high credit quality from growth industries as well as defensive industries in light of Covid-19. These include Technology, Media, and Telecommunications (TMT), professional services, as well as healthcare and pharmaceutical sectors. In addition, the portfolio boasts high occupancy and a long WALE of 6.8 years.
Despite the pandemic’s demand shock in 2020, moderate levels of new developments, low vacancy rates (particularly Grade A), and above average levels of pre-leasing, are limiting the risk of excess new supply from speculative developments. The portfolio remains well positioned in terms of market fundamentals and is expected to benefit from faster recovery rates in jurisdictions where the office properties are located, as compared to the average recovery rate for Europe as a whole.
MERIT’s total return target of 12% IRR represents both a yield plus growth opportunity from a strong, fully invested and income generating portfolio. The Trust has a term of five years with provision for two, one-year extensions and will make distributions on a semi-annual basis in Euro.
1 Based on exchange rate EUR1:S$1.61 as at 30 September 2020
2 From FY15/16 to FY19/20
3 Eventual ownership stake and excludes DSE ownership
Strategically located in Spinningfields, Manchester, 3 Hardman Street is a 12-storey building with an NLA of 36,704 sqm.
West Station, located in Warsaw, Poland comprises two 14-storey buildings with an NLA of 68,851 sqm.
Located in Sandyford Business Park in Dublin, Ireland, Nova Atria comprises two adjoining six-storey office blocks with an NLA of 31,505 sqm.
Papendorp Park, located in Utrecht, The Netherlands spans an NLA of 43, 282 sqm across six buildings.
