Capital released from the sale will grant the Reit greater financial flexibility to pursue investment opportunities

 

MAPLETREE Logistics Trust is planning to sell a warehouse located in Tuas South Avenue for S$10.5 million, as part of the real estate investment trust&rsquo s (Reit) efforts to refresh its portfolio.

 

The Reit&rsquo s trustee, HSBC Institutional Trust Services, has entered into a purchase agreement with an unrelated third-party buyer for the proposed sale of the 25-year-old warehouse, which has a net lettable area of about 5,200 square metres.

 

The manager of Mapletree Logistics Trust : M44U 0% on Friday (May 10) said that JTC Corporation, which is the landlord of industrial properties in Singapore, has granted in-principle approval for the transaction. It added that capital released from the divestment will provide the Reit with greater financial flexibility to pursue investment opportunities in high-specification, modern logistics facilities with greater growth potential.

 

The property&rsquo s sale price is 10.5 per cent above the latest valuation of S$9.5 million as at Mar 31.

 

The proposed divestment is expected to be completed by the first quarter of its 2024/2025 fiscal year. It is not expected to have a material impact on its net asset value and net property income for the current fiscal year.

 

Once the divestment of the warehouse &ndash which is part-one-storey and part-two-storey &ndash Mapletree Logistics Trust&rsquo s portfolio will consist of 187 properties.

 

MAPLETREE Logistics Trust (MLT) will snag three Grade A warehouses &ndash one in Malaysia, and two in Vietnam &ndash for RM558.8 million (S$157.9 million) and 1.3 trillion Vietnamese dong (S$68.4 million) respectively, its manager announced on Thursday (Feb 29).

 

The manager said the agreed property value of the Malaysia logistics property in Kuala Lumpur represents a discount of some 0.2 per cent to the independent valuation obtained by HSBC Institutional Trust Services (Singapore), as MLT&rsquo s trustee.

 

And if the manager&rsquo s own valuation is considered, the discount deepens to 1.1 per cent, the manager said.

 

The warehouse &ndash situated in Shah Alam, one of the country&rsquo s major industrial regions that is &ldquo highly sought after&rdquo by third party logistics companies and end-users for domestic distribution and last mile delivery &ndash is expected to generate an initial net property income (NPI) yield of some 5.7 per cent, the manager said.

 

Meanwhile, the Vietnam properties &ndash located in Ho Chi Minh City and Hanoi &ndash are expected to generate an initial NPI yield of about 7.5 per cent.

 

The price of the Vietnam properties represents a discount of 3.2 per cent and 2.9 per cent to the valuations obtained by the trustee and manager respectively, the manager disclosed.

 

These warehouses are at Binh Duong province&rsquo s Mapletree Logistics Park 3 &ndash an established hub for industrial and logistics players &ndash and Hung Yen province&rsquo s Hung Yen Logistics Park I, which is attractive for export distribution and as a fulfilment centre for e-commerce delivery to Hanoi, the manager said.

 

The total acquisition cost, including acquisition-related expenses, is estimated to top S$234 million.

 

The manager intends to finance the acquisitions through a mix of debt and part of the sales proceeds from divestments in recent quarters. MLT&rsquo s aggregate leverage is expected to increase from 38.8 per cent as at Dec 31, 2023, to 39.6 per cent on a pro forma basis after financing the acquisitions, it disclosed.

 

Ng Kiat, the chief executive officer of the manager, noted that the purchase follows the completion of over S$200 million in divestments year to date.

 

Pointing out that the new properties are strategically located in logistics hubs serving growing consumption bases in the respective countries, Ng said the acquisitions position MLT&rsquo s portfolio to capture emerging Asia&rsquo s growth potential. 

 

In a statement, the manager added that modern, Grade A warehouses &ndash such as the ones MLT is purchasing &ndash account for a minority of total supply in Malaysia and Vietnam, comprising 39 per cent and 30 per cent of total warehouse supply by floor area respectively.

 

MLT&rsquo s acquisition of the three logistics facilities thus positions the trust to meet the evolving demands of tenants, while capturing the rent premiums commanded by modern warehouses over traditional ones, the manager said.

 

The acquisitions will increase MLT&rsquo s exposure in Malaysia and Vietnam from 24 assets to 27 assets gross floor area in Malaysia will increase by 20.6 per cent to 775,572 square metres (sq m), while that in Vietnam will rise 21.0 per cent to 703,941 sq m.

 

In Asia, Malaysia and Vietnam have been key beneficiaries of the structural shift in supply chains, which are reshaped by the ongoing impact of the US-China trade war, pandemic disruptions and rising political pressures to deglobalise, the manager said.

 

These countries benefit, in part, due to their competitive labour costs, skilled workforces and supportive government policies, it added.