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Tue, October 20, 2020 – 5:50 am
Singapore
MAPLETREE Logistics Trust (MLT) announced on Monday that it seeks to acquire nine logistics properties in China, Malaysia and Vietnam, as well as the remaining 50 percent stake in 15 properties in China for a total of S $ 1.09 billion.
The agreed property value added of the properties was S $ 1.04 billion, MLT said.
These properties will be purchased from subsidiaries of sponsor Mapletree Investments and subsidiaries of Itochu Corporation.
The Reit manager said the properties are “high-quality logistics facilities” built to Grade A specifications, including heavy floor loading, high ceilings, large floor plates, and access ramps for those that are several floors.
Most of the properties in China have cross-docking functions that allow for fast movements of goods, he added. The properties also meet the modern requirements of third-party logistics companies and e-commerce tenants.
The properties are said to be located in key logistics hubs in China, Malaysia, and Vietnam, and are well connected to transportation infrastructure such as roads, train stations, air and sea ports. They are also close to large population draws, a growing priority for tenants, especially e-commerce players, because it means cost and operational efficiencies, he said.
The manager said there is a shortage of modern grade A warehouses in these markets, allowing them to earn a rental premium that averages 20 percent over traditional warehouses.
The properties have a 94.7 percent committed occupancy, with a weighted average lease maturity (per net leasable area) of 2.3 years. They are rented out to a diversified tenant base consisting primarily of tenants serving domestic consumer markets. Key tenants include major e-commerce players like JD.com and Cainiao, international logistics companies like Maersk and Kuehne + Nagel, as well as consumer brands like Decathlon.
Together, e-commerce or e-compliance tenants account for about 58 percent of gross property income.
The servicer intends to finance the proposed acquisitions through a combination of equity (including the issuance of trading units) and debt.
Following the acquisitions, MLT’s regional presence will expand to 51 cities in eight geographic markets with access to an aggregate population base of more than 150 million people.
Separately, it has reported a per unit distribution (DPU) of 2,055 Singapore cents for its second quarter ending September 30, 2020, up from 2,025 cents a year ago. The total amount distributable to unit holders grew 6.2% to 78.3 million Singapore dollars; his net property income increased by 8.9 percent to S $ 118.9 million.
This is because gross revenue increased 8.3 percent to S $ 131.9 million, primarily driven by higher revenue from existing properties, contributions from cumulative acquisitions completed in fiscal 19/20, as well as the initial contribution of phase 2 of the Ouluo logistics park, a redevelopment project in Shanghai, China, which was recently completed.
However, revenue growth was tempered by rental refunds granted to eligible tenants who were impacted by Covid-19 and the absence of contribution from an alienated property in the previous financial year.
For its half-year results, the amount distributable to shareholders grew 6 percent year-on-year to S $ 156.1 million, while the DPU increased 1.2 percent to 4.1 cents on an expanded unit basis.
Portfolio occupancy stood at 97.5% as of September 30, 2020, compared to 97.2% in the previous quarter. This reflects higher occupancy rates in Singapore, South Korea and China, although it was partially offset by a slightly lower occupancy rate in Hong Kong.
Reit’s manager said that amid a moderate economic environment due to the pandemic, the portfolio achieved a lower positive rental reversal of about 1.5 percent, from 1.9 percent in the previous quarter. Leases in Hong Kong, Japan, Vietnam and China contributed mainly to this.
As of September 30, 2020, MLT had a 39.5% leverage ratio with an average debt duration of 3.8 years. Based on the available committed credit lines, it has more than enough liquidity to meet its debt obligations that are due in the next 12 months, the manager said.
In his perspective, Reit’s manager pointed out that tenants remain cautious about expansion and are slower to commit in the face of economic uncertainties. He added that a prolonged pandemic situation and an economic recession can negatively affect the demand for storage space.
Ng Kiat, Managing Director, said: “We will continue to deepen our network effect in Asia-Pacific and remain prudent in maintaining a strong balance sheet in these uncertain times.”
MLT units closed with a Singapore penny at Singapore $ 2.08 on Monday.
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