Mapletree Industrial Trust - OCBC Investment 2019-02-19: Finalising Funding Options For 18 Tai Seng Street


Mapletree Industrial Trust - Finalising Funding Options For 18 Tai Seng Street

  • 103.4m new units to be issued.
  • Used to partially fund acquisition.
  • Revised Fair Value of S$1.98.

Receipt of in-principle approval for private placement new units

  • MAPLETREE INDUSTRIAL TRUST (SGX:ME8U) recently announced on 12 Feb that it had closed its upsized private placement exercise, with 103.36m new units to be issued at an issue price of S$1.945 per unit, or a discount of 4.2% to its last closing price prior to the announcement.
  • Mapletree Industrial Trust subsequently received in-principle approval from SGX-ST on 18 Feb for the listing and quotation of the new units. (see Mapletree Industrial Trust's announcements)
  • Total gross proceeds to be raised amount to ~S$201m. The private placement was ~2.2 times covered after taking into account the upsized option (initial plans were to raise no less than S$175m in gross proceeds).
  • The issue price of S$1.945 came in at the lower end of an indicative price range of S$1.935 to S$1.99 announced a day before the private placement was closed.
  • Approximately S$197.8m, or 98.4% of the gross proceeds would be utilised to partly finance the acquisition of 18 Tai Seng Street (total acquisition outlay of S$271.0m), with the balance being used to pay the fees and expenses associated with the private placement.

Advanced DPU estimated to be between 1.69-1.73 S cents

  • Due to the private placement, an advanced distribution estimated to be between 1.69 S cents to 1.73 S cents would be paid. This is based on the proration of the estimated 4QFY19 distribution by 50 days (i.e. for the period from 1 Jan 2019 to 19 Feb 2019), and translates to an annualised yield of 6.2%-6.3%.

Updating our assumptions following private placement

  • We are not surprised at this equity fund raising exercise, as management had previously guided that it was considering various funding options including partial debt and equity when Mapletree Industrial Trust proposed to acquire the property. However, as we had previously assumed full debt financing for the acquisition, we now update our projections in accordance to the finalised funding details.
  • We trim our FY19 and FY20 DPU forecasts by 1.2% and 2.9%, respectively. Consequently, our fair value estimate is lowered from S$2.04 to S$1.98.

Wong Teck Ching Andy CFA OCBC Investment Research | 2019-02-19
SGX Stock Analyst Report HOLD MAINTAIN HOLD 1.98 DOWN 2.040