Mapletree Logistics Trust in $1.09 billion property buying spree

Post-acquisitions, MLT's regional footprint will expand to 51 cities in eight geographic markets.
Post-acquisitions, MLT's regional footprint will expand to 51 cities in eight geographic markets.PHOTO: ST FILE

SINGAPORE (THE BUSINESS TIMES) - Mapletree Logistics Trust (MLT) announced on Monday (Oct 19) that it is seeking to acquire nine logistics properties in China, Malaysia and Vietnam, and also the remaining 50 per cent interest in 15 properties in China for a total of $1.09 billion.

The aggregate agreed property value of the properties was $1.04 billion, said MLT.

These properties will be purchased from subsidiaries of sponsor Mapletree Investments and subsidiaries of Itochu Corporation.

The Reit manager said that the properties are "high-quality logistics facilities" built to Grade-A specifications, including strong floor load, high ceilings, large floor plates and ramp access for those that are multi-storey properties.

The majority of the China properties have cross-docking features that enable fast movements of goods, it added. The properties also cater to the modern requirements of third-party logistics firms and e-commerce tenants.

The properties are said to be located in key logistics hubs of China, Malaysia and Vietnam, and well-connected to transport infrastructure such as highways, railway stations, air and sea ports. They are also near large population catchments - an increasing priority for tenants, especially e-commerce players, because it means operational and cost efficiencies, said the manager.

The manager said there is a scarcity of modern Grade-A warehouses in these markets, enabling them to command a rent premium averaging 20 per cent over traditional warehouses.

The properties have a committed occupancy of 94.7 per cent, with weighted average lease expiry (by net lettable area) of 2.3 years. They are leased to a diversified tenant base comprising primarily tenants serving the domestic consumer markets. Key tenants include leading e-commerce players such as and Cainiao, international logistics companies like Maersk and Kuehne + Nagel, as well as consumer brands like Decathlon.

In aggregate, e-commerce or e-fulfilment tenants account for approximately 58 per cent of the properties' gross revenue.

The manager intends to finance the proposed acquisitions via a combination of equity (including the issuance of consideration units) and debt.

Post-acquisitions, MLT's regional footprint will expand to 51 cities in eight geographic markets with access to an aggregate population base of over 150 million people.

Separately, it has declared a distribution per unit (DPU) of 2.055 Singapore cents for its second quarter ended Sept 30, 2020, up from 2.025 cents a year ago. The total amount distributable to unitholders grew 6.2 per cent to $78.3 million; its net property income increased by 8.9 per cent to $118.9 million.

This comes as gross revenue went up 8.3 per cent to $131.9 million, mostly driven by higher revenue from existing properties, contributions from accretive acquisitions completed in FY19/20, as well as initial contribution from Ouluo Logistics Park Phase 2, a redevelopment project in Shanghai, China which was completed recently.

However, revenue growth was tempered by rental rebates granted to eligible tenants who were impacted by Covid-19 and the absence of contribution from a property divested in the previous financial year.

For its half-year results, amount distributable to unitholders grew 6 per cent year on year to $156.1 million while DPU rose 1.2 per cent to 4.100 cents, on an enlarged unit base.

Portfolio occupancy stood at 97.5 per cent as at Sept 30, 2020, up from 97.2 per cent in the previous quarter. This reflects higher occupancy rates in Singapore, South Korea and China, though it was partially offset by a slightly lower occupancy rate in Hong Kong.

The Reit manager said that amid a subdued economic environment due to the pandemic, the portfolio achieved a lower positive rental reversion of approximately 1.5 per cent, from 1.9 per cent in the previous quarter. This was mainly contributed by leases in Hong Kong, Japan, Vietnam and China.

As at Sept 30, 2020, MLT had a gearing ratio of 39.5 per cent with an average debt duration of 3.8 years. Based on the available committed credit facilities on hand, it has more than sufficient liquidity to meet its maturing debt obligations in the coming 12 months, said the manager.

In its outlook, the Reit manager noted that tenants remain cautious on expansion and are slower to commit in view of the economic uncertainties. It added that a prolonged pandemic situation and economic downturn may adversely affect demand for warehouse space.

Ms Ng Kiat, chief executive officer of the manager, said: "We will continue to deepen our network effect in the Asia-Pacific and remain prudent in maintaining a strong balance sheet amid these uncertain times."

MLT units closed up one cent to $2.08 on Monday.