Singaporean landlord Mapletree Investments is understood to be launching its first European office fund this month despite the disruption caused by covid-19, PERE can reveal exclusively.
Mapletree is planning to raise €500 million in equity for its Mapletree Europe Income Trust by the end of March. Mapletree will contribute around one-third of the equity raised, according to the firm. With a loan-to-value ratio of 60 percent, the fund has a target internal rate of return of 12 percent. It is understood that the vehicle has been seeded with seven assets across seven major cities in Europe. The fund currently has €1.2 billion in assets under management.
The firm had originally planned to introduce MERIT last year after the launch of its $4.5 billion logistics fund Mapletree US and EU Logistics Private Trust in 2019, but the plan was delayed due to the disruption caused by covid-19 pandemic. The Singaporean investor started acquiring assets in 2015 when it first expanded into Europe. Some of these assets were being put under MERIT.
Chua Tiow Chye, deputy group chief executive officer at Mapletree, told PERE that the firm has not seen any distressed selling of office properties in Europe. In fact, because of the low interest rate environment, institutions continue to deploy more capital given the attractive yield spread versus other developed markets, according to Chua. “We also have not seen much of a value or operational impact on our MERIT portfolio arising from covid-19, mainly because of the quality of our portfolio and long weighted average lease expiry backed by strong tenants largely from the technology, media and telecom and healthcare space,” he added.
As of March 31, 2020, Mapletree had 22 percent of its S$60.5 billion ($45.2 billion, €37.3 billion) in AUM in office assets and about 42 percent of its AUM in logistics, industrial and data centers globally.
Mapletree started venturing outside of Asia into Europe, US and Australia in 2014. Since then, it has launched four private REITs including MERIT. In 2017, the firm launched the $1.5 billion Mapletree Global Student Accommodation Private Trust to invest in student accommodation in the UK and the US. In 2019, it introduced the $4.5 billion Mapletree US and EU Logistics Private Trust to invest in pan-US and pan-European logistics assets. In the same year, it also launched the A$1.4 billion ($1.1 billion; €893 million) Mapletree Australia Commercial Private Trust to invest in office properties in key Australian gateway cities.