Mapletree Logistics Trust (MLT) is strengthening its presence in Singapore with the acquisition of five modern, ramp-up logistics properties here from Hong Kong-listed CWT International for about $778.3 million.
The sum includes the purchase price of $730 million, and the estimated upfront land premium for the balance lease terms payable to JTC Corporation of $48.3 million.
In addition to this, there will be acquisition fees payable to Mapletree Logistics Trust Management (MLTM) of $3.7 million, as well as stamp duties, and professional and other fees totalling $23.9 million.
Mapletree highlighted that the proposed acquisition is in line with its strategy to acquire modern logistics facilities, at a point where Singapore's warehouse market may see a recovery on the back of tapering supply between 2018 and 2022.
This will allow the manager to focus on other areas, such as the "selective divestment of older low-yielding properties with limited redevelopment potential", so as to protect its portfolio's rental yield.
The acquisition, on a sale-and-leaseback arrangement for terms ranging from five to 10 years, is subject to approvals from JTC and the shareholders of CWT International. CWT International is the subsidiary of debt-strapped Chinese conglomerate HNA Group.
The properties comprise five ramp-up warehouses in the western part of Singapore with a total gross floor area of around 3.2 million square feet on a combined land area of over 1.5 million sq ft, and a weighted average age of 4.8 years.
Two of the properties are in Tanjong Penjuru, one is in Toh Guan Road East and the other two are in Fishery Port Road and Pandan Avenue, respectively.
The individual price tags of the properties range from $78 million to $244 million.
Meanwhile, the total price tag of $730 million for the five properties represents a discount of about 3.3 per cent to the independent valuation of $755.2 million as at June 27 by Colliers International Consultancy & Valuation.
MLTM chief executive Ng Kiat said: "This acquisition will strengthen MLT's position as one of the largest modern-specs warehouse space providers in Singapore. Total gross floor area in our Singapore portfolio will increase by almost 20 per cent to over 20 million square feet, allowing us to benefit from Singapore's continued growth as a global logistics hub."
With a combined weighted average lease expiry of 8.7 years and built-in rent escalation of 1.5 per cent per annum, the acquisition is expected to generate an initial net property income yield of approximately 6.2 per cent, based on the price of $778.3 million.
The deal is slated for completion by September, after which Mapletree's total assets under management will increase to about $7.6 billion.
After the acquisition, CWT will become Mapletree's top tenant, with a gross revenue contribution of about 9.5 per cent. HNA took Singapore-listed CWT Ltd private last year for $1.4 billion, while its Hong Kong-listed unit HNA Holding Group was rebranded as CWT International after the takeover.
Last month, ARA Asset Management moved to acquire all the shares that it did not own in the Reit manager and property manager of Cache Logistics Trust, buying the stakes previously held by CWT Ltd.
CWT Ltd held 40 per cent of the shares in the Reit manager and 60 per cent of the shares in the property manager.
HNA co-founder and chairman Wang Jian died this week after a fall in Provence, France. He had a stake of under 15 per cent in the group.
Units in Mapletree closed unchanged at $1.23 yesterday.