Brokers’ take: Maybank upgrades Mapletree Logistics Trust to ‘buy’ on latest acquisition news  

ANALYSTS are positive on Mapletree Logistics Trust (MLT) after its manager announced on Thursday (Mar 30) that it will buy eight logistics properties in Japan, Australia and South Korea, deepening its regional footprint.

Maybank Securities upgraded the real estate investment trust (Reit) to “buy” from “hold”, as it believes that the acquisition will be accretive to its distribution per unit (DPU), while keeping aggregate leverage below 40 per cent. 

On Friday, Maybank raised MLT’s target price to S$1.80 from S$1.60, to reflect an increase in DPU estimates in FY2024 and FY2025 by 0.5 per cent and 2 per cent respectively, after accounting for the proposed deal and overall higher funding costs. 

Maybank analyst Krishna Guha said MLT’s latest acquisition will improve the quality of the trust’s portfolio, while also deepening its regional footprint.  

Though the Reit’s aggregate leverage is estimated to rise to 39.9 per cent after the acquisition, Guha said valuation gains for the overall portfolio and potential divestments will help put a cap on its leverage. 

Another positive development could be receding exchange rate volatility, which Guha views as a boon for MLT, as the trust derives 57 per cent of revenue in currencies other than the Singapore dollar and Hong Kong dollar. 

Separately, CGS-CIMB raised the Reit’s target price to S$1.88 from S$1.84 upon lifting DPU estimates by 0.4 per cent in FY2024 and 1.7 per cent in FY2025. 

This comes after factoring in new contributions from the trust’s proposed acquisition, as well as the issue of new units from its private placement.

The brokerage maintained its “add” call on MLT, and believes the acquisition will rejuvenate MLT’s portfolio in cities where there is tight supply and low vacancy rates for logistics warehouses. 

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Mapletree Logistics Trust buys 8 Asia-Pac assets for over S$900 million, plans private placement

Its analysts noted on Friday that the transaction will bring MLT’s assets under management in developed markets to 73 per cent, versus 70 per cent previously. 

They also highlighted that given the assets’ expected initial property yields in their various locations, their overall acquisition is expected to be accretive when compared with the management’s guidance of an average 2.3 per cent funding cost. 

“With its balance sheet still on solid footing, we believe MLT would likely look to tap new acquisition opportunities even as it continues on its capital recycling strategy,” said CGS-CIMB.

Units of MLT were flat at S$1.70 as at 2.50 pm on Friday.