MapleTree – DB

Announces S$146m of acquisitions and equity issue

Announces accretive acquisitions in Singapore/Japan and placement
MLT’s first acquisitions in more than a year are forecast to raise FY10-11 DPU by 1-1.5%, and marks a return of accretive acquisitions. We continue to like MLT’s stable and well-diversified portfolio, anchored by long leases and quality tenants. Capital structure remains relatively stable with gearing unchanged post-placement. We have revised up our DPUs and TP to reflect the accretion from the acquisitions; Buy maintained.

Placement to raise up to S$82m; proceeds to fund Singapore acquisitions
MLT has launched a private placement for 115m new units (5.9% of existing units) between S$0.69-0.71 (6.6% to 3.9% disc to VWAP) per unit to raise gross proceeds of up to S$82m. Proceeds will be used to fully finance the acquisitions of 2 warehouses in Singapore (S$78m). The resulting debt headroom will be used to fund the acquisition of a third asset in Japan (S$68m). NPI yields for the S’pore and Japan assets are above 9% and 7% respectively (vs current NPI yields of 6.5% and 4.5% respectively), contributing to 1.5% pro-forma DPU accretion.

Revising up FY10-11E DPU by 1-1.5%
We revise down FY09E DPU marginally by 0.7% to 5.83cts to reflect dilution from the new units (expected to be issued on 18 Nov) and have increased FY09-10E DPUs by 1-1.5%. The Singapore acquisitions are expected to be completed by end Dec 09 while the acquisition of the Japan property should be completed by 1Q10. MLT will declare an advanced distribution for existing units from 1 Oct-17 Nov of around 0.74-0.76cts.

Maintain Buy with revised TP of S$0.83 (from S$0.82)
We maintain our Buy rating with valuations attractive at 0.84x P/B and 7.9% FY10E yield. MLT is well-positioned with its well-diversified portfolio and high proportion of long leases. Recovering credit and capital mkts could continue to restore its acquisition-led business model and regional growth strategy; parent Mapletree continues to hold the pipeline of devt assets in Vietnam, China and Malaysia in which MLT has a ROFR. We value MLT using a DDM (see p.5). Risks: reversal of recovery trends for the economy impacting leasing demand, credit risk from tenants on long sale & leasebacks, higher than expected rise in borrowing costs