Mapletree Logistics Trust (MLT) is to acquire four dry warehouses in Sydney, Australia for A$85 million (S$84.4 million) from Altis Real Estate Equity Partnership (Areep) II Fund.
These are located in Sydney's outer central west region, within 4km to 10km from MLT's existing facility, Coles Chilled Distribution Centre.
The region has emerged as Sydney's premier logistics hub given its proximity to the intersection of two major expressways, which provide direct access to the Sydney airport and seaports, as well as the central business district and major suburbs in Northern, Southern and Western Sydney.
The warehouses have a combined gross floor area (GFA) of 52,907 sq m sited on freehold land of 123,320 sq m. One of the properties has an expansion-land of 11,504 sq m which can potentially yield an additional 6,840 sq m of GFA.
The warehouses are currently fully leased to seven tenants which are established local enterprises from diverse industry sectors serving the domestic Australian economy.
The trust manager believes the acquisition offers an attractive net property income yield of 7.1 per cent and is expected to be accretive at the distribution level.
The acquisition will provide regular and growing cash flow to MLT's rental revenue as it is purchased with existing leases with a weighted average lease expiry of 5.5 years (based on net lettable area) as at July 1, 2016. There are also in place fixed annual escalations of rent.
Following this acquisition, gross revenue contribution from Australia will account for some 6.1 per cent of MLT's overall gross revenue, up from 4.3 per cent currently.
MLT is expected to incur estimated transaction costs of about A$6.1 million, which include stamp duty, professional advisory fees and the acquisition fee payable to the trust manager.
The purchase will be funded by proceeds raised from the recent issuance of $250 million of perpetual securities and is expected to complete in July, subject to receipt of Australian Foreign Investment Review Board's approval.
Taking into account the issuance of perpetual securities and post completion of the acquisition, MLT's aggregate leverage ratio will be about 36 per cent.
This will take MLT's total portfolio to 122 properties with a book value of about $5.2 billion.