MIT – BT

MIT expected to raise up to $1.19b from IPO

Offer opens today and closes on Oct18; unit trading may start on Oct21

MAPLETREE Industrial Trust (MIT) is expected to raise up to $1.19 billion in gross proceeds from its initial public offering (IPO), having priced its offer price at the top end of the indicative range.

It is on the lookout for acquisition opportunities and asset-enhancement initiatives for existing properties.

While the bulk of IPO proceeds goes towards paying off debt, MIT chief executive Tham Kuo Wei said the trust has sufficient working capital and debt headroom of $256 million to seek further growth.

‘We have sufficient funds set aside for operational activities,’ he told reporters at a briefing yesterday. ‘If you are talking about growth acquisitions, we will be able to draw on the debt headroom if needed.’

But as a trust with a local mandate, MIT will focus on Singapore for the time being and will seek feedback from unitholders before expanding overseas.

For its IPO, MIT is offering 594.91 million units at $0.93 per unit, subject to an overallotment option of another 91.75 million units.

Separately, six cornerstone investors have agreed to subscribe for 322.58 million units at the offer price. They are AIA, Prudential Asset Management (Singapore), Henderson Global Investors, Columbia Wanger Asset Management, US investment firm DE Shaw and Dutch pension fund APG.

The sponsor’s two wholly owned subsidiaries, Mapletree Dextra Pte Ltd and Sienna Pte Ltd, will also subscribe for 359.45 million units at the offer price, taking Mapletree’s stake post-listing to about 31 per cent, assuming that the greenshoe option is fully exercised.

The offer price represents an annualised distribution yield of 7.6 per cent for fiscal 2010, which is estimated to rise to 8 per cent for fiscal 2011.

MIT chief financial officer Loke Huey Teng said the trust plans to pay out 100 per cent of its distribution income to unitholders from listing until March 31, 2012.

The public offer opens today and closes on Oct 18. The units are expected to commence trading on Oct 21.

MIT is the third real estate investment trust (Reit) to be launched by Temasek’s wholly owned Mapletree Investments. It is Singapore’s largest private landlord for multi-user flatted factory space with an 11.2 per cent market share.

Valued at $2.1 billion as at Aug 31, MIT’s IPO portfolio of 70 properties has a total net lettable area (NLA) of about 1.1 million square metres and a gross floor area of 1.5 million sq m.

Mr Tham said there was potential for organic rental revenue growth in the next few years as MIT’s average rents catch up with market rents.

Singapore’s strong manufacturing sector is expected to continue to drive demand for logistics and industrial space, he added.

MIT will be mainly using the IPO proceeds and a new debt facility of $837 million from three banks – DBS Bank, Standard Chartered Bank and Citibank – to pay down the existing debt.

Post-listing, MIT will have an average debt maturity of 3.4 years with no more than 30 per cent of debt falling due in any one year, which is ‘appropriate for a trust of this size’, Ms Loke said.

MIT has obtained an expected credit rating of BBB+ from Fitch Ratings, which allows it to borrow up to a maximum of 60 per cent of the value of the deposited property.

Post-listing, its aggregate leverage will be 38.5 per cent, up from 38.1 per cent as at March 31.