Mapletree Logistics Trust to spend S$234 million on Malaysia, Vietnam Grade A warehouse acquisitions

MAPLETREE Logistics Trust (MLT) will snag three Grade A warehouses – one in Malaysia, and two in Vietnam – for RM558.8 million (S$157.9 million) and 1.3 trillion Vietnamese dong (S$68.4 million) respectively, its manager announced on Thursday (Feb 29).

The manager said the agreed property value of the Malaysia logistics property in Kuala Lumpur represents a discount of some 0.2 per cent to the independent valuation obtained by HSBC Institutional Trust Services (Singapore), as MLT’s trustee.

And if the independent valuation obtained by the manager is considered, the discount deepens to 1.1 per cent, the manager said.

The warehouse – situated in Shah Alam, one of the country’s major industrial regions that is “highly sought after” by third party logistics companies and end-users for domestic distribution and last mile delivery – is expected to generate an initial net property income (NPI) yield of some 5.7 per cent, the manager said.

Meanwhile, the Vietnam properties – located in Ho Chi Minh City and Hanoi – are expected to generate an initial NPI yield of about 7.5 per cent.

The price of the Vietnam properties represents a discount of 3.2 per cent and 2.9 per cent to the valuations obtained by the trustee and manager respectively, the manager disclosed.

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These warehouses are at Binh Duong province’s Mapletree Logistics Park 3 – an established hub for industrial and logistics players – and Hung Yen province’s Hung Yen Logistics Park I, which is attractive for export distribution and as a fulfilment centre for e-commerce delivery to Hanoi, the manager said.

The total acquisition cost, including acquisition-related expenses, is estimated to top S$234 million.

The manager intends to finance the acquisitions through a mix of debt and part of the sales proceeds from divestments in recent quarters. MLT’s aggregate leverage is expected to increase from 38.8 per cent as at Dec 31, 2023, to 39.6 per cent on a pro forma basis after financing the acquisitions, it disclosed.

Ng Kiat, the chief executive officer of the manager, noted that the purchase follows the completion of over S$200 million in divestments year to date.

Pointing out that the new properties are strategically located in logistics hubs serving growing consumption bases in the respective countries, Ng said the acquisitions position MLT’s portfolio to capture emerging Asia’s growth potential. 

In a statement, the manager added that modern, Grade A warehouses – such as the ones MLT is purchasing – account for a minority of total supply in Malaysia and Vietnam, comprising 39 per cent and 30 per cent of total warehouse supply by floor area respectively.

MLT’s acquisition of the three logistics facilities thus positions the trust to meet the evolving demands of tenants, while capturing the rent premiums commanded by modern warehouses over traditional ones, the manager said.

The acquisitions will increase MLT’s exposure in Malaysia and Vietnam from 24 assets to 27 assets; gross floor area in Malaysia will increase by 20.6 per cent to 775,572 square metres (sq m), while that in Vietnam will rise 21.0 per cent to 703,941 sq m.

In Asia, Malaysia and Vietnam have been key beneficiaries of the structural shift in supply chains, which are reshaped by the ongoing impact of the US-China trade war, pandemic disruptions and rising political pressures to deglobalise, the manager said.

These countries benefit, in part, due to their competitive labour costs, skilled workforces and supportive government policies, it added.

MLT units closed up 0.7 per cent at S$1.48 on Thursday (Feb 29), before the announcement.