Mapletree Logistics Trust - OCBC Investment 2018-10-09: Consolidating Its Stronghold In Singapore

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MAPLETREE LOGISTICS TRUST SGX:M44U

Mapletree Logistics Trust - Consolidating Its Stronghold In Singapore

• Total acquisition cost of S$804.2m.
• Expected initial NPI yield of 6.2%.
• Focus remains on APAC.

Completed acquisition of logistics assets from CWT

• Having proposed to acquire a portfolio of five modern ramp-up logistics properties in Singapore from CWT Pte Ltd in early Jul, Mapletree Logistics Trust (MLT) has now completed the acquisition on 28 Sep following the relevant approvals and a successful private placement exercise.
• As a recap, the total acquisition cost based on the final structure adopted was ~S$804.2m. This comprised
  1. the purchase consideration of S$730.0m,
  2. upfront land premium of ~S$45.9m paid to JTC for the balance leases terms,
  3. acquisition fee payable to the Manager of S$3.7m and
  4. estimated stamp duties and other fees of ~S$24.6m.
• Mapletree Logistics Trust had completed a private placement in late Sep to raise gross proceeds of S$375m (309.9m new units at S$1.21 per unit). Of this, ~S$326.2m (or 87% of gross proceeds raised) has been fully utilised to partially fund the purchase consideration, while the balance S$48.8m was used to partially pay the upfront land premium to JTC and other expenses incurred.

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Initial NPI yield of 6.2%

• The acquisition of this portfolio is expected to contribute an initial NPI yield of 6.2%. 
• CWT will become Mapletree Logistics Trust’s top tenant, providing ~9.5% of its gross revenue. To address concerns of potential concentration risk, we note that approximately 30% of CWT’s gross revenue to Mapletree Logistics Trust will be contributed by third party end-users under sub-leases.
• Factoring the above mentioned transactions in our model, we raise our fair value estimate from S$1.34 to S$1.37.

Penetration into new markets more likely a longer-term strategy

• Mapletree Logistics Trust’s sponsor, Mapletree Investments, has been active in expanding its global logistics footprint. On 3 Oct, it announced the acquisition of a portfolio of logistics properties in the US (such as Chicago, Dallas and Seattle) and Europe (such as Paris and Warsaw) from Prologis, Inc, for US$1.1b.
• While this provides Mapletree Logistics Trust with a potential acquisition pipeline, we believe its focus over the near-term will remain on the APAC region. Thereafter, management would likely be open to exploring opportunities in new markets, in our view, but would evaluate all potential transactions prudently. This would also give time for Mapletree Investments to stabilise the portfolio of assets acquired in the US and Europe.

Wong Teck Ching Andy CFA OCBC Investment Research | https://www.iocbc.com/ 2018-10-09

SGX Stock Analyst Report BUY Maintain BUY 1.37 Up 1.340