MI-REIT : BT

MacarthurCook Reit paints bullish outlook before S’pore debut

MACARTHURCOOK Industrial real estate investment trust (MacarthurCook Reit) , which starts trading here on Thursday, is upbeat about expanding its portfolio, hoping to take advantage of Asia’s growing industrial property market. The Reit, managed by Australia’s MacarthurCook Ltd, has set a target of adding $500 million worth of assets to its portfolio annually and is optimistic of achieving this within a year of listing.

‘We are confident we can achieve our target,’ MacarthurCook Reit chief executive officer Chris Calvert told XFN-Asia in an interview. Funding for further acquisitions would probably come from the sale of additional shares in the Reit, given the company’s rapid expansion plans. ‘With our IPO our gearing is only going to be about 8 per cent, so we can acquire more properties without raising anymore equity. We can just borrow more money till we get to 35 per cent,’ MacarthurCook Reit managing director and chief investment officer Craig Dunstan said, referring to the gearing level the firm is comfortable with.’But the reality is we would probably have to go to the equity market at least once a year, probably for a very long time,’ Mr Dunstan said.

The Reit is selling 247.33 million shares at $1.20 each at its IPO, and another 6 million shares to MacarthurCook Ltd and 7.1 million shares to MacarthurCook’s partners. In all, MacarthurCook Reit will raise $312.5 million, which it will use to pay for its initial portfolio of 12 properties in Singapore, valued at $316.2 million.

The 12 properties are currently 100 per cent-leased and are expected to generate a combined rental income of $24.47 million in the year to March 2008 and $25.82 million in the following financial year. With these assets, Mr Calvert believes the Reit has gained good traction on the industrial property market here, with more opportunities to make further acquisitions. ‘At this stage it is still not a very highly securitised market and we see ample opportunities (for growth),’ he said, adding, ‘we are very busy behind the scenes’.

MacarthurCook Reit will compete with other industrial Reits in Singapore including Ascendas Reit, Mapletree Logistics Trust, and Cambridge Industrial Trust, but the firm believes there is enough room for all players to continue to make yield-accretive acquisitions. ‘There are so few Reits focused on industrial property and so much industrial property out there, we actually don’t come across each other that often,’ Mr Dunstan said. ‘Ascendas Reit is focused on office parks, Mapletree just logistical facilities, whereas our portfolio looks at office parks, logistic facilities and also manufacturing facilities. So we have a broader scope of investment.

‘MacarthurCook Reit is also actively looking for properties in Japan, Malaysia and Hong Kong. And further down the road, it intends to acquire industrial properties in China, South Korea and the Philippines. The firm aims to keep 40 per cent of its assets located in Singapore to provide the Reit with stable returns.