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Mapletree eyes S$10b of deals a year as more funds planned

Singapore

MAPLETREE Investments may strike up to S$10 billion of deals annually buying and selling properties as it seeks to set up more private funds over the next five years.

The company prefers to raise funds for acquisitions by selling assets, rather than through bank loans or issuing bonds, group chief executive officer Hiew Yoon Khong said in an interview.

Mapletree is also looking at listing two real estate investment trusts (Reits) that could be backed by overseas assets in student accommodation and logistics in the next four to five years, with a "sweet spot" for each IPO of about S$2 billion, he said.

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Mapletree, which is owned by investment company Temasek Holdings, currently manages four Singapore-listed Reits and six private real estate funds.

Mr Hiew aims to increase assets managed to S$90 billion within the next five years, with the company planning to stick to existing asset classes rather than look to new ones. Mapletree owned and managed S$55.7 billion of properties as at March 31.

"With our global footprint now, we are increasingly looking at the really big boys, the Brookfields and Blackstones," said Mr Hiew, who joined the company as CEO in 2003 when it managed just over S$2 billion. "Whether it is profitability or operational benchmarks, we are now benchmarked to global companies."

The firm focuses on logistics, student accommodations, office space, corporate housing and data centres, having expanded in recent years to the United States and Europe.

Mapletree's investment of S$3 billion to S$5 billion in new assets annually will be funded by divestments of an equivalent size, as this is the company's approach to recycle capital efficiently, Mr Hiew explained.

The company is also looking to syndicate an office fund in Australia this year. On average, the group is looking to seed two new private funds a year over the next five years. In Australia, the company has a corporate housing property in Brisbane and at least eight office properties, according to its 2018 financial report.

China's great deleveraging drive has Mapletree Investments ready to pounce on office properties in Shanghai and Beijing, provided prices fall a bit.

"Because of deleveraging and the trade war, a lot of companies are monetising some of their assets to strengthen their balance sheets," Mr Hiew said. "That is driving the increased number of assets for sale, but the price expectation is still quite high."

Mr Hiew said he expects prices to fall by 10 to 15 per cent within the next six to 12 months if the trade war worsens. That would be the prime time to buy property, he added.

The firm has 17 per cent of its real estate assets in Hong Kong, and 13 per cent in China, according to its 2018 report. "Notwithstanding the trade war, we are still confident that if you look at the Chinese economy long term it is still a very positive economy," he said.

Turning to Hong Kong, Mr Hiew said Mapletree's business hasn't been significantly affected by clashes between protesters and police that shut down the city centre earlier last week. The firm's assets aren't near the location of the protests and have been spared the worst of the disruption that has roiled the city, he pointed out.

One of the group's trusts, Mapletree Logistics Trust, had nine properties in Hong Kong as at March 31, 2019. Another, Mapletree North Asia Commercial Trust, owns the Festival Walk mall along Tat Chee Avenue in Kowloon, well away from the focus of the protests in the central business district on Hong Kong island.

"On a prolonged basis it's not good, but at some point we need to rely on the leaders in Hong Kong to sort out the political issues," Mr Hiew added. "Hopefully it will get resolved quickly but for the time being, our assets are not impacted by where the demonstrations are taking place." BLOOMBERG