Monday 25 March 2013

Mapletree Logistics Trust

OCBC on 25 Mar 2013

Mapletree Logistics Trust (MLT) announced last Friday that it has entered into an option to purchase agreement for the divestment of 30 Woodlands Loop in Singapore at a sale price of S$15.5m. This represents a significant premium to its purchase price of S$10.3m in 2007 and its valuation price of S$11.0m in Mar 2012. The divestment is expected to be completed by May, and is expected to generate a net disposal gain of ~S$5.0m, which will be distributed to unitholders (subject to clarification on tax treatment). We re-jig our forecasts to take into account the divestment and the potential distribution of the net disposal gains in FY14. However, our fair value remains unchanged at S$1.25. We maintain our BUY rating on MLT.

Divestment of 30 Woodlands Loop
Mapletree Logistics Trust (MLT) announced last Friday that it has entered into an option to purchase agreement with Advanced CAE Pte Ltd, a subsidiary of SGX-listed Advanced Holdings Ltd, for the divestment of 30 Woodlands Loop in Singapore at a sale price of S$15.5m. This represents a significant premium to its purchase price of S$10.3m in 2007 and its valuation price of S$11.0m in Mar 2012. The divestment is expected to be completed by May, and is expected to generate a net disposal gain of ~S$5.0m, which will be distributed to unitholders (subject to clarification on tax treatment). Assuming the disposal gain is tax-exempt, we estimate an additional DPU of 0.2 S cents in FY14 due to the divestment.

Second capital recycling attempt
30 Woodlands Loop is a four-storey factory building with a build-up area of ~89,340 sqft and a leasehold tenure of 60 years from 1 May 1995 (42 years remaining). The property was first put up for sale in Aug 2012 at the same price tag of S$15.5m to Accenovate Engineering Pte Ltd. According to the initial announcement, the decision to divest the property came as a result of limited growth potential (building specifications no longer suitable for modern warehousing requirements) and attractive offer on hand. However, as the buyer’s application to purchase the property was not approved by JTC Corporation after failing to meet its evaluation criteria, the transaction did not proceed further. In the current case, we understand that JTC has already granted in-principle approval for the transaction subject to the fulfilment of stipulated conditions. Hence, we expect the divestment to go through.

Maintain BUY
We re-jig our forecasts to take into account the divestment and the potential distribution of the net disposal gains in FY14. However, our fair value remains unchanged at S$1.25. We maintain our BUY rating on MLT.

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