MapleTree – DBS

A small but significant step forward

• Placement of new units for acquisitions
• Impact on DPU is small but signifies management intent on growing unitholder value
• Maintain BUY, TP S$0.84

Placement of 115m new units to grow portfolio. Mapletree Logistics Trust (MLT) announced a placement of 115m units to raise cS$79m (priced @ S$0.69, 5.6% discount to VWAP). Proceeds are expected to partially finance its target acquisition of 3 properties worth cS$145m in Singapore and Japan. The target assets come with secured leases, averaging 5- 8 years and in-built growth of 2% for the Singapore assets. This, in our view, should further improve MLT’s income visibility and stability going forward.

+1% accretion to forward DPU estimates. Based on an EBITDA yield of 8.4% for the new assets, our estimated FY10-11F DPU estimates are nudged upwards by c1% to 6.0 – 6.2 Scts after accounting for dilution from the new placement units. We adjust our estimates slightly downwards in 2009 to account for the slight dilution from new units in 4Q09.

Post this placement and completion of the 3 acquisitions, gearing is expected to remain at c38%.

Maintain BUY, TP S$0.84. This current acquisition plan while small in size, is a signal of the manager’s intent and focus at growing shareholder value while not over-leveraging the trust’s balance sheet. We are attracted by MLT’s prospective FY10F-11F yield of 8.2%-8.4%, underpinned by its DPU of 6-6.2 Scts which could continue to grow when the manager further executes on its growth plans. Current closing price offers a total return of 22% to our target price.