SINGAPORE (Oct 22): The manager of Mapletree Logistics Trust (MLT) has announced a proposed private placement to raise gross proceeds of around $250.0 million to help fund the trust’s proposed acquisition of seven logistics properties in Malaysia, Vietnam and China.
In a bourse filing on Tuesday, MLT says it will offer between 154.6 million and 158.3 million new units at an issue price of between $1.579 and $1.617 each in a private placement to institutional, accredited and other investors.
The issue price range represents a discount of between 3.1% and 5.4% to the volume weighted average price (VWAP) of $1.6685 for all trades in the units in MLT on Oct 21, the last market day before the placement agreement was signed on Tuesday.
The issue price will be determined by the manager and the joint global co-ordinators and bookrunners – Citigroup Global Markets Singapore, DBS Bank, and The Hongkong and Shanghai Banking Corporation (HSBC) Singapore Branch – following a book-building process.
The manager intends to use some $241.7 million, or 96.7% of the gross proceeds of the private placement, to partially fund the acquisitions.
The remaining $8.3 million will be used to pay the estimated professional and other fees and expenses incurred in connection with the acquisitions and private placement.
The manager says it believes that the private placement is an efficient and overall beneficial method of raising funds to finance the total acquisition outlay.
Shopping spree across Asia
The private placement announcement comes just a day after MLT said it is acquiring a clutch of high-quality modern logistics properties at a total acquisition price of $383.9 million to enhance its portfolio and regional network presence.
The proposed acquisitions include a logistics property in Malaysia at an acquisition price of around RM826.0 million ($269.9 million), as well as two logistics properties in Vietnam for a total of US$38.9 million ($53.3 million) through the acquisition of property holding companies.
In addition, MLT is acquiring a 50% interest in each of four logistics properties in China at a total acquisition price of approximately RMB314.3 million ($60.7 million) through the acquisition of property holding companies.
The remaining 50% interest in the China properties will be held by subsidiaries of MLT’s sponsor, Mapletree Investments.
Additionally, in relation to the China acquisitions, MLT’s pro rata share of bank loans owed by these property holding companies to certain financial institutions comes up to around RMB144.0 million. The bank loans will not be discharged and will remain after the completion of the China properties acquisition.
Including estimated professional and other fees and expenses of approximately $8.3 million, MLT’s total acquisition outlay is estimated to be approximately $394.2 million.
The acquisitions are expected to be distribution per unit (DPU) and net asset value (NAV) per unit accretive.
According to the manager, Malaysia, Vietnam and China are attractive logistics market underpinned by favourable demand-supply dynamics.
It notes that growth in domestic consumption as well as e-commerce has generated a strong demand for modern logistics properties in prime locations.
The manager adds that the supply of modern Grade A warehouses in these markets is relatively low, thus supporting a rent premium averaging 20% over traditional warehouses.
The acquisitions will add three cities – Chengdu, Jinan and Shenyang – to MLT’s network. It will also deepen its presence in four other cities: Shah Alam, Bac Ninh, Binh Duong and Changsha.
The properties are 100% leased to a strong and diversified tenant base catering mainly to the consumer markets, with a weighted average lease expiry by net lettable area of 1.9 years.
The tenant base currently includes consumer brands such as Watsons and Ashley Furniture, as well as e-commerce players Lazada eLogistics and Shopee.
Steady 2Q results
MLT will look to the acquisitions to provide an avenue for further growth amid its steady performance.
For the 2Q19/20 ended September, MLT saw its amount distributable to unitholders climb 15.4% year-on-year to $73.7 million, from $63.9 million a year ago.
DPU rose by a more modest 3.4% to 2.025 cents for 2Q19/20, from 1.958 cents a year ago, on an enlarged unit base.
2Q19/20 gross revenue grew 14.2% to $121.8 million, on the back of stable performance across all markets, augmented by higher contribution from Hong Kong as well as contributions from the completed redevelopment of Mapletree Ouluo Logistics Park Phase 1 and accretive acquisitions in Singapore, Australia, South Korea and Vietnam completed in FY18/19.
Property expenses fell 23.3% to $12.6 million during the quarter, mainly due to lower land rent recognised with the adoption of a new accounting standard as well as divestments completed in 1Q19/20.
Consequently, net property income (NPI) jumped 21.0% to $109.1 million in 2Q19/20.
As at end-September, cash and cash equivalents stood at $117.0 million.
Looking ahead, MLT says overall occupancies for its logistics facilities have remained relatively resilient at 97.5%, despite customers in its core markets of Singapore and Hong Kong being cautious and slower to commit amid the macroeconomic uncertainties.
MLT says this has led to shorter lease signings and lower positive rental reversions.
“Amidst growing economic headwinds, MLT continued to deliver steady growth in DPU this quarter, underpinned by our portfolio rejuvenation strategy,” says Ng Kiat, CEO of the manager.
“Occupancy rates remain robust although there is more caution in leasing demand. We will maintain focus on active lease management and tenant retention in this volatile market,” she adds.
As at 4.48pm on Tuesday, units in MLT are trading flat at $1.66.
