Mapletree Logistics Trust (MLT) announced yesterday that it will be acquiring a portfolio of seven dry warehouse facilities in Japan from Goodman Japan Limited for a total consideration of JPY17.5b (~S$292m). According to management, the acquisition is expected to be DPU-accretive, generating a stabilized weighted average NPI yield of ~6.2%. This is higher than the implied NPI yield of 5.6% for MLT’s existing Japan portfolio. We understand that management intends to fund the investment through a combination of debt and proceeds raised from the issuance of its S$350m perpetual securities. When the acquisition is completed (likely in Apr 2012), MLT’s aggregate leverage may come around 38%, as compared to 41.4% as at 31 Dec 2011. We maintain our BUY rating with a revised fair value of S$1.20 (S$1.18 previously) on MLT.
Details of acquisition assets
Mapletree Logistics Trust (MLT) announced yesterday that it will be acquiring a portfolio of seven dry warehouse facilities in Japan from Goodman Japan Limited for a total consideration of JPY17.5b (~S$292m). All seven logistics facilities, we note, are built with modern specifications and are strategically located within key logistics hubs in the Hokkaido, Greater Tokyo, Nagoya and Osaka regions. The properties also have a young weighted average building age of 4.9 years and allow for an additional 30,000 sqm of GFA (24.1% of existing aggregate GFA) when their permissible plot ratios are maximized.
Favourable NPI yield and lease duration
According to management, the acquisition is expected to be DPU-accretive, generating a stabilized weighted average NPI yield of ~6.2%. This is higher than the implied NPI yield of 5.6% for MLT’s existing Japan portfolio. Presently, the properties are 100% leased to quality, single users for the next 5-25 years, with a weighted average lease to expiry of 9.3 years. This should provide strong and predictable cash flow to MLT’s rental revenue, as well as customer and geographical diversification, in our view.
Perpetual securities to fund part of purchase consideration
We understand that management intends to fund the investment through a combination of debt and proceeds raised from the issuance of its S$350m perpetual securities. When the acquisition is completed (likely in Apr 2012), MLT’s aggregate leverage may come around 38%, as compared to 41.4% as at 31 Dec 2011. Going forward, we believe that eyes will be on the successful deployment of the remaining proceeds on yield-accretive investments, so as to make up for shortfall in distributable income resulting from the distribution payment of the perpetual securities. As for now, we factor in the impact from the perpetual securities issuance and acquisitions into our FY12-13 forecasts. This raises our RNAV-based fair value from S$1.18 to S$1.20. We maintain our BUY rating on MLT.
Mapletree Logistics Trust (MLT) announced yesterday that it will be acquiring a portfolio of seven dry warehouse facilities in Japan from Goodman Japan Limited for a total consideration of JPY17.5b (~S$292m). All seven logistics facilities, we note, are built with modern specifications and are strategically located within key logistics hubs in the Hokkaido, Greater Tokyo, Nagoya and Osaka regions. The properties also have a young weighted average building age of 4.9 years and allow for an additional 30,000 sqm of GFA (24.1% of existing aggregate GFA) when their permissible plot ratios are maximized.
Favourable NPI yield and lease duration
According to management, the acquisition is expected to be DPU-accretive, generating a stabilized weighted average NPI yield of ~6.2%. This is higher than the implied NPI yield of 5.6% for MLT’s existing Japan portfolio. Presently, the properties are 100% leased to quality, single users for the next 5-25 years, with a weighted average lease to expiry of 9.3 years. This should provide strong and predictable cash flow to MLT’s rental revenue, as well as customer and geographical diversification, in our view.
Perpetual securities to fund part of purchase consideration
We understand that management intends to fund the investment through a combination of debt and proceeds raised from the issuance of its S$350m perpetual securities. When the acquisition is completed (likely in Apr 2012), MLT’s aggregate leverage may come around 38%, as compared to 41.4% as at 31 Dec 2011. Going forward, we believe that eyes will be on the successful deployment of the remaining proceeds on yield-accretive investments, so as to make up for shortfall in distributable income resulting from the distribution payment of the perpetual securities. As for now, we factor in the impact from the perpetual securities issuance and acquisitions into our FY12-13 forecasts. This raises our RNAV-based fair value from S$1.18 to S$1.20. We maintain our BUY rating on MLT.
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