MLT – SGX
MAPLETREELOG ACQUIRES PROPERTY IN CHINA FOR RMB155 MILLION
Singapore, 5 July 2007 – Mapletree Logistics Trust Management Ltd. (“MLTM”), manager of Mapletree Logistics Trust (“MapletreeLog”), is pleased to announce that MapletreeLog has signed a Reservation Agreement to acquire three warehouses in Putuo District, Shanghai, China for RMB155 million (S$31 million1) from Shanghai Shunjie Logistics Co., Ltd (“Shanghai Shunjie”) and Longtong Warehouse Management (Shanghai) Co Ltd. The properties (“Northwest Property”) will be purchased by MapletreeLog’s wholly foreign-owned enterprise to be incorporated in China.
Northwest Property will be purchased with assignment of existing leases. The tenants are a Spanish discount supermarket operator, a leading car maker in Japan and an American-based information technology wholesale distributor providing sales, marketing and logistics services for the IT industry. All three tenants are well-established multi-national companies. Shanghai Shunjie will take up the remaining space in the property for its logistics operations. Shanghai Shunjie is a local third party logistics company with nearly 20 years of experience in logistics operations. They provide a full range of logistics services such as airfreight, road transportation, railway, express delivery and storage, including inbound as well as outbound services.
Northwest Property is located in Northwest Logistics Park, Jinda Road, Putuo District, Shanghai. The acquisition will be accretive to MapletreeLog’s distribution per unit (“DPU”) and the pro forma financial effect of the acquisition on the DPU for the financial year ended 31 December 2006 would be an additional 0.04 Singapore cents per unit2.
Benefits and rationale of the acquisition
Mr. Chua Tiow Chye, Chief Executive Officer of MLTM, said, “We are very pleased with this acquisition which strengthens our presence in Shanghai. This follows our purchases of Ouluo Distribution Centre in Shanghai, Xi’an Seastar Distribution Centre and our announced acquisition of the American Industrial Park in Guangzhou. This acquisition, our fourth in China, consolidates MapletreeLog’s position in Shanghai, which is the first choice for many international companies to set up distribution centres in eastern China. The Northwest Logistics Park area is a wellestablished logistics hub and the acquisition of a good asset in this choice location will entrench our presence in Shanghai. We are also very happy to welcome the four quality names into our family of tenants.”
“The continued economic growth and emerging affluent middle class have resulted in the rapid urbanization and consumption trends in China. Distribution centres play an important role in the supply chain of moving goods across China. The acquisition of Northwest Property will allow us to capitalise on these growing and increasing important retail and wholesale sectors,” Mr. Chua said.
According to Jones Lang LaSalle, growth in China’s property market for warehousing and distribution centres is likely to take off in 2007 as global retailers expand aggressively in the country3.
In the International Monetary Fund’s April 2007 World Economic and Financial Surveys, China has seen an increase in its production capacity and capability. In many sectors – notably aircraft, home electrical appliances, industrial machinery, precision apparatus and automobiles – export of final products have continued to grow strongly. Retail sales grew by over 13 percent in 2006, with car sales rising by nearly 25 percent.
Funding
The acquisition is expected to be completed by early 2008. From MapletreeLog’s perspective, the Manager intends to fund the acquisition entirely by debt. However, this does not preclude the Manager from exploring alternative means of funding should the need arise.
General description of the property
Northwest Property comprises three single-storey warehouses with an ancillary office building and a four-storey building used as dormitory.
Northwest Property is located in Jinda Road, Putuo District, Shanghai. It is about 1 km to Huning highway and Huning railway. Situated 5 km from Hongqiao Airport, it has easy access to downtown Jiangsu and Zhejiang Province.
1 Based on exchange rate of S$1.00 to RMB5.03
2 Assuming that MapletreeLog had purchased, held and operated the subject property for the whole of the financial year ended 31 December 2006 (based on 41 properties) and that the acquisition is fully funded by debt.
3 Reuters, “Big retailers fuel China’s logistics growth”, 8 March 2007
Source : SGX