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

THE manager of Mapletree Logistics Trust (MLT) on Thursday (Mar 30) said it is in the process of buying eight logistics properties in Japan, Australia and South Korea for a total acquisition price of S$913.6 million.

The total acquisition price represents a discount of approximately 4 per cent to the aggregate valuations by the independent property valuers appointed by the manager.

Including acquisition-related expenses, the total acquisition cost is estimated to be approximately S$946.8 million.

The real estate investment trust (Reit) manager said it is also in talks to purchase two logistics assets in China for S$209.6 million and divest a non-core property in Hong Kong for S$100.3 million.

The manager said it intends to fund the proposed acquisitions via a combination of equity, debt and divestment proceeds.

In a separate announcement on Thursday, the manager of MLT also proposed a private placement of between 121,285,000 and 124,223,000 new units at an issue price range of S$1.61 to S$1.649 per new unit. It expects to raise gross proceeds of S$200 million from the placement exercise.

The manager intends to use S$145.5 million of the proceeds to repay existing debt, S$50 million to fund the acquisitions, and S$4.5 million to pay the estimated professional fees and other expenses incurred through the acquisitions or private placement exercise.

The issue price range represents a discount of between 2.9 per cent and 5.2 per cent to the volume-weighted average price (VWAP) of S$1.6989 for all trades done from Mar 29 up to the time the placement was signed on Mar 30.

Subtracting an estimated cumulative distribution of S$0.025, the issue price represents a discount of about 1.5 per cent and 3.8 per cent to the adjusted VWAP.

The final issue price will be announced on the Singapore Exchange after a book-building process.

“We expect these transactions to accelerate our rejuvenation and recycling strategy,” said Ng Kiat, chief executive officer of MLT’s manager.

“By divesting low-yielding assets and recycling the proceeds into higher-yielding, modern facilities in prime, tight-supply locations such as Tokyo, Sydney and Seoul, we will strengthen the resilience and growth potential of MLT’s future rental streams,” she added.

MLT estimates that the Japan property will bring in a yield of 3.5 per cent based on the acquisition price, while the South Korean and Australian assets have an estimated yield of 4.6 per cent.

The proposed transaction is expected to be accretive to the trust’s distribution per unit (DPU) and net asset value (NAV) on a pro forma basis.

The Reit manager said DPU for the nine-month period ended December (9M FY22/23) would be 2.2 per cent higher at S$0.06894, compared to S$0.06743 before the acquisitions.

Pro forma NAV per unit would edge up 0.6 per cent to S$1.421, from S$1.414 previously.

Analysts who spoke to The Business Times, however, were not overly excited about the transactions – one of only a handful of acquisitions and equity fund raising by Singapore-listed real estate investment trusts (S-Reits) this year.

David Lum, an analyst at Daiwa Capital Markets, said he was “neither hugely positive nor hugely negative” about MLT’s announced acquisitions and private placement.

“It seems like what they are paying for the assets is okay,” he said. “It appears there was a competitive tender, and their bid satisfied the seller.”

RHB analyst Vijay Natarajan was also “neutral” on the transaction.

“We like the asset quality with modern specifications and believe the pricing for the deal is reasonably attractive but are slightly concerned at the timing and size of the deal as we see potential slight cap rate expansions in the near-term,” Natarajan said.

Coming amid still-rising interest rates and uncertainty in the banking sector, MLT’s announcements on Thursday also raise questions on the capital management front.

After the portfolio acquisition, equity fund raising and potential Hong Kong asset divestment, the Reit’s aggregate leverage will rise to 39.9 per cent, from 36.6 per cent before the acquisitions.

However, Natarajan does not see the gearing of slightly below 40 per cent as a major concern.

“MLT has a proven divestment track record and the Reit manager has guided that it has identified additional about S$500 million worth of assets for near-term divestments,” he said.

Meanwhile, Daiwa’s Lum also believes that the proposed private placement is “likely to go through” without much resistance.

“I’m not sure what the investor demand is for a placement at this time, but for a Reit with MLT’s track record, it’s not a large amount,” Lum said. “Although the market is a bit delicate, S$200 million is not a lot.”

“The proposed acquisition does upgrade their portfolio; and after the dust settles, the portfolio will be in better shape,” he added.

Citigroup Global Markets Singapore, DBS, HSBC’s Singapore branch and UBS’ Singapore branch have been appointed as the joint global coordinators and bookrunners for the private placement.

MLT has halted trading on its units since Thursday morning, ahead of the announcements. It closed on Wednesday down 0.6 per cent or S$0.01 at S$1.70.