The manager of Mapletree Logistics Trust M44U (MLT) announced, on March 30, that it has proposed to acquire properties in Japan, Australia and South Korea for a total acquisition price of $913.6 million.
The REIT manager will be acquiring six logistics properties in Japan for 64.02 billion yen ($652.7 million) and one logistics property in Sydney, Australia for A$125.7 million ($112.2 million). It has also entered into a binding memorandum of understanding (MOU) with third parties to acquire a logistics property in Seoul, South Korea for 144.8 billion won ($148.7 million).
The total acquisition price represents a discount of about 4% to the total valuations by the independent property valuers who were appointed by the manager, says MLT. Including acquisition-related expenses, the acquisitions are expected to cost the REIT around $946.8 million.
All of the properties are fully leased to a diversified and blue-chip tenant base comprising 14 reputable companies. As at Jan 31, the weighted average lease expiry (WALE) by net lettable area (NLA) stood at 4.0 years for the properties in Japan, 7.8 years for the one in Sydney and 3.6 years for the one in Seoul. They are expected to generate an initial net property income (NPI) yield of 3.5% in Japan, 4.7% in Australia and 4.6% in South Korea.
The acquisitions will boost MLT’s portfolio rejuvenation towards a “resilient and future-ready portfolio”, says the REIT manager. They will also expand MLT’s logistics footprint in Tokyo, Sydney and Seoul, which are said to have a tight supply of logistics facilities and low vacancy rates. According to the REIT manager, vacancy levels in the logistics submarkets of Saitama Central and Chiba Inland where the Tokyo properties are located were 1.1% and 5.1% respectively.
In Sydney, after two years of record take-up and limited supply, the vacancy rates for industrial and logistics facilities have fallen to record low levels of below 1%. The south-east submarket in SMA, where the Seoul property is located, has a vacancy rate of 2.7%.
The acquisitions will increase MLT’s exposure in Japan, Australia and South Korea to 60 assets from 52 previously, over 1.95 million sqm in gross floor area (GFA) from 1.62 million sqm previously. The number of unique tenants will also increase to 120 from 106.
In addition to the acquisitions, the REIT manager says it is in discussions to acquire two modern logistics properties in Jiaxing, China. The properties – one of which is completed and the other under construction – have an estimated total value of RMB1.09 billion ($209.6 million).
Further to its statement, the REIT manager says it is looking to separately divest one of its existing properties in Hong Kong’s New Territories for HK$590 million ($100.3 million).
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More details will be announced if they materialize, adds the REIT manager.
“We expect these transactions to accelerate our rejuvenation and recycling strategy. By divesting low-yielding assets and recycling the proceeds into higher-yielding, modern facilities in prime, tight-supply locations such as Tokyo, Sydney and Seoul, we will strengthen the resilience and growth potential of MLT’s future rental streams,” says Ng Kiat, CEO of the manager.
Transactions said to be DPU accretive
Including the unconfirmed transactions in China and Hong Kong, the acquisitions and divestment are expected to be accretive to MLT’s distribution per unit (DPU), with DPU accretion on a pro forma basis at 2.2% for the 9MFY2022 ended Dec 31, 2022.
Fund raising
In a separate announcement on the same day, MLT’s manager announced that it is proposing to raise around $200.0 million through an equity fund raising of new units in the REIT.
The fund raising will be conducted through a private placement of 121.28 million and 124.22 million new units priced between $1.610 to $1.649 per new unit.
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The price range represents a discount of between 1.5% and 3.8% to the adjusted volume weighted average price (VWAP) of $1.6739 per unit. The price is calculated based on the VWAP of all trades done in MLT’s units on March 29.
Of the $200.0 million, $145.5 million will be used to repay existing debts while $50.0 million will be used to partially fund the proposed acquisitions. The remaining $4.5 million will go towards the fees incurred for the acquisitions and private placement.
The new units will be offered to eligible institutional, accredited and other investors.
Citigroup Global Markets Singapore Pte. Ltd., DBS Bank Ltd., The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch (HSBC Singapore) and UBS AG, Singapore Branch have been appointed as the joint global co-ordinators and bookrunners for the private placement.
Units in MLT last traded at $1.70 before its trading halt on the morning of March 30.
