EQUITIES: Alliance Global exits MLT with US$105m block trade

10 July 2012

The Philippines’ Alliance Global Properties sold its entire stake of 5.7% in Mapletree Logistics Trust to raise S$133.8m (US$105.2m). It sold 139.4m shares at S$0.98 each, the bottom of the S$0.96–$0.98 guidance, giving a 4.5% discount to the July 9 close and a dividend yield of around 7.3% at that price.

This statement says for funding raising. For what, not mention.

Personally feel is still okay to hold on to it. 96c should be a strong support. In addition, qtrly payout of 1.7c is coming. I hope share price will recover by then. 

Industrial REITs: Muted impact of 30-year lease for industrial properties.

 

Mapletree Logistics Trust (BUY/S$0.97/S$1.10)

 

The Ministry of Trade and Industry (MTI) announced that it is halving the tenure of industrial sites under its government land sales (GLS) programme from a maximum of 60 years to a maximum of 30 years. Smaller industrial sites will see a slight increase in tenure from 19 years to 22 years. In addition, the government continued to boost the supply of land available for tender, releasing 23.72 ha for the 2H12 GLS, close to the 23.97 ha released in the 1H12 GLS. The total 47.69 ha of land released for 2012 is 1.4 times that for 2011.  Near-term impact on industrial REITs muted. The impact will be muted for industrial REITs as acquisitions will continue to come from the existing stock of industrial properties with over 75-95% of industrial properties owned outside of the REITs. Our checks with industrial REITs suggest that this rule has not been extended to industrial Build-to-Suit (BTS) sites, as these sites are allocated by JTC and are assessed on their own merits. Anecdotally, the lower land tenure of 30 years has been anticipated by the market to a certain extent.

 

Longer-term impact mitigated by active asset management and overseas acquisitions. In the longer term, we anticipate that industrial REITs will be more pro-active in asset management, through divestments or redevelopment of older properties, and will also look towards overseas acquisitions to mitigate the impact of shorter land leases in Singapore. New acquisitions at 30-year leases will also be priced at an estimated 50-100bp premium over properties with 60-year leases. We retain our valuations for the industrial REITs. Mapletree Logistics Trust (MLT) will see the least impact on its portfolio, as MLT has 25% of its portfolio comprising freehold land with an average lease tenure of 59.4 years. Cache has the lowest land lease tenure of 39.1 years.