MLT eyes up to S$300 million in acquisitions in Malaysia, Vietnam and India

MAPLETREE Logistics Trust (MLT) expects to make between S$200 million and S$300 million in acquisitions in its current financial year in countries such as Malaysia, Vietnam and India, the real estate investment trust’s (Reit) manager said on Wednesday (Oct 25).

“We will be buying some more. Before the year end, you should hear us buying some more,” said Ng Kiat, chief executive of the manager, at a briefing delivered to analysts on the Reit’s first-half results.

Divestments will also be a key part of the Reit’s strategy, as it seeks to rejuvenate its portfolio; MLT expects to let go of S$500 million in assets in the coming years.

“We have a very strong balance sheet, and an active recycling programme,” she said, noting that divestments have paved the way for further acquisitions.

According to her, a “substantial portion” of buyers in the market – especially speculative ones – have dropped off, and MLT is expecting some expansion in capitalisation rates. “We want to take this opportunity to get some good-value properties from third parties and our sponsor.”

The Reit previously announced an acquisition of eight assets across the Asia-Pacific for over S$900 million in March, ahead of the S$200 million to S$300 million announced on Wednesday.

The manager expects strong growth from countries such as India, Vietnam and Malaysia. “Acquisitions coming out from these three markets will be of great interest to us,” Ng said.

It is also keeping an eye on other markets. Korea and Australia, for example, have seen cap-rate expansions, though things there may not have reached a bottom yet. “So maybe we will wait a bit. But if it’s a good asset in a good location, and we’re able to get it at a good price, we will do that,” Ng added.

Ng said of MLT’s planned divestments of around S$500 million over the next few years (or around S$100 million to S$200 million per year): “Investors need to understand that we are not a stagnant platform. We are not going to pretend and tell investors that the assets that we have had since 2005 are going to be relevant in 2025.”

She explained that the logistics industry has undergone a major structural shift, with greater demands for automation and flexibility of expansion, and noted that the Reit aims to have “the most modern fleet of warehouses” in as many locations as needed.

Assets with specifications less relevant to current needs – and there are such assets in Hong Kong, Japan, Singapore, Malaysia, Korea and Australia – would either be rebuilt or sold, Ng said. Talks are ongoing, and the assets that will be divested will depend on the buyer and the price, she shared. Further divestments will be announced later this year. Ng rejected the view that the divestments were being undertaken to lift the Reit’s distribution per unit (DPU).

MLT reported on Tuesday that the amount distributable to unitholders in Q2 grew 4.2 per cent on year to S$112.5 million, which included S$8.8 million of divestment gain. DPU grew 0.9 per cent to S$0.02268 cents on an enlarged unit base.

“The reason we are doing (divestments) is not that we are keen to harvest and distribute divestment gains to unitholders,” Ng said. “This divestment strategy will be a critical tool to keep our platform young, relevant and competitive for the next 10 years.”