Mapletree Logistics Trust to buy cold-storage facility in Melbourne for A$42.8m

THE manager of Mapletree Logistics Trust (MLT) M44U : M44U 0% has proposed to acquire a fully-leased, freehold cold-storage facility in Australia for A$42.8 million (S$42.8 million).

At this purchase price, the acquisition is expected to generate an initial net property income yield of 4.3 per cent, and will be accretive at the distribution level, the real estate investment trust's (Reit) manager said.

The property was valued at A$43 million by Knight Frank as at June 21, 2021, based on the capitalisation and discounted cash flow methods.

Following this deal, MLT will have five logistics assets in Melbourne and a total of 13 assets in Australia with more than A$870 million in assets under management and 352,400 square metres (sq m) of leasable space.

The property in the proposed acquisition is located in the inner west precinct of Melbourne, near the Reit's existing four properties.

Spanning a total net lettable area of about 14,747 sq m, the facility has five blocks of cold and freezer warehouse, ambient warehouse, office space and other amenities.

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up

It is 100 per cent leased to Austco Polar Cold Storage, a wholly-owned subsidiary of Australia-listed Wingara, for the storage, packaging and export of red meat products.

The Austco lease at the property will last the next 13 years with annual rent escalations. It will thus provide MLT with a stable and growing income stream backed by an established tenant, the Reit manager said.

The acquisition will be fully funded by debt and is expected to be completed by Q3 FY2021/2022, subject to conditions precedent being fulfilled.

Upon completion, MLT's aggregate leverage ratio is estimated to be 38.7 per cent.

The Reit manager described the inner west precinct of Melbourne as "a location of choice for users from the logistics, light manufacturing and food distribution industries" due to its connectivity to major arterial routes and proximity to the city centre and the Port of Melbourne.

The strong growth in the e-commerce, food and grocery sectors last year has supported robust demand for cold-storage facilities, MLT's manager said.

Nonetheless, Australia still has a relatively low supply of such facilities as compared to other developed markets, it added.

Units in MLT dropped about 1 per cent or S$0.02 to close at S$2.09 on Friday, before the announcement.

READ MORE:

• Cold storage facilities a long-term play in alternative property investment: M&G
• Brokers' take: Mapletree Log Trust expected to stay resilient despite moderation in acquisitions