SINGAPORE (Sept 22): OCBC is maintaining its “buy” call on Mapletree Logistics Trust (MLT) with an unchanged fair value estimate of $1.35.
MLT recently concluded a private placement exercise, which was 3.3 times covered with the final issue price coming in at the top end of the indicative range at $1.175, indicating the firm interest in the trust’s prospects. It raised gross proceeds of $353.5 million.
A non-renounceable preferential offering (PO) was also launched on the bases of one new unit for every 10 existing units in MLT.
The issue price of $1.145 for the PO also came in at the top end of the previous indicative range, raising further gross proceeds of $286.5 million.
The equity fund raising (EFR) is expected to raise collective proceeds of $640 million.
On the other hand, the trust also announced that it has priced $180 million fixed rate perpetual securities (PS) at a distribution rate of 3.65% per annum.
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In a Friday report, lead analyst Andy Wong Tech Ching says, “We view this as a healthy rate for the issuer, driven by strong demand as the subscription rate was 6.7 times.”
To recap, the reason for the EFR exercise is to raise funds to partially fund the acquisition of Mapletree Logistics Hub Tsing Yi in Hong Kong from its sponsor Mapletree Investments.
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“The purchase consideration of ~HK$4.8 billion ($834.8 million) is expected to translate into an initial NPI yield of 5.7%, which we deem to be attractive,” says Wong.
See: Mapletree Logistics Trust to acquire Hong Kong warehouse for $834.8 mil
The analyst recommends unitholders to subscribe to their pro rata entitlement of the PO.
As at 2.23pm, units in MLT are trading at $1.20 or 14.1 times FY17 price to earnings with a DPU yield of 6.2%.
