Mapletree Logistics Trust - DBS Research 2020-01-29: Upsizing Its Japan Exposure

MAPLETREE LOGISTICS TRUST (SGX:M44U)

Mapletree Logistics Trust - Upsizing Its Japan Exposure

Proposed an accretive acquisition of a modern logistics facility in Japan for JPY22.2bn (S$272.5m) at 4.0% yield.
Top quality attributes within Kobe with minimal competition of similar quality in the vicinity.
Acquisition came ahead of our expectations and will imply upside to our estimates.
Gearing to edge up to c.39% (see-through basis) post deal but still within optimal levels.

Mapletree Logistics Trust (SGX:M44U) has announced its acquisition of a logistics facility in Kobe, Japan for JPY22.2bn (c.S$272.5m). Mapletree Logistics Trust will acquire an effective interest of 98.47% in the property through a TMK structure, which is a common investment structure to invest in real estate in Japan.
The property is newly constructed (completed in April 2019) with NLA of 84,783 sqm, which is a large property in Japan. It is a prime Grade A logistics property with double rampways and is one of the best specifications property within the area it is located in, according to independent market consultant, CBRE.
The vendor is an indirect subsidiary of Sponsor, Mapletree Investments.
Given that the size of the deal exceeds the materiality threshold ( > 5% of NAV), an EGM, no later than end of February 2020, will be called to approve this transaction.

We believe the property offers better specifications than what its current portfolio offers. In the near and medium term, we believe this will strengthen MLT’s footprint in Japan, as the property is 99.7% leased to a high-quality tenant base and enjoys built-in rental escalations. The tenants are mainly supporting the consider-related industry (c.32% of the tenants serve the F&B industry, 25% Fashion, Apparel & Cosmetic).
At an initial yield of c.4.0%, Mapletree Logistics Trust is estimated to achieve a 2.3% accretion based on YTD 9M20 DPU. Mapletree Logistics Trust will fully fund the acquisition with debt.
We have previously assumed S$500m worth of acquisitions to be completed by end of March 2021. This deal will imply near-term upside to our estimates.
Maintain BUY and Target Price of S$1.90 for Mapletree Logistics Trust.
See Mapletree Logistics Trust Share Price; Mapletree Logistics Trust Target Price; Mapletree Logistics Trust Analyst Reports; Mapletree Logistics Trust Dividend History; Mapletree Logistics Trust Announcements; Mapletree Logistics Trust Latest News.

Derek TAN DBS Group Research | Singapore Research Team DBS Research | https://www.dbsvickers.com/ 2020-01-29

SGX Stock Analyst Report BUY MAINTAIN BUY 1.900 SAME 1.900