MLT – BT

MapletreeLog buys 7.3b yen property in Hiroshima

MAPLETREE Logistics Trust (MapletreeLog) is forking out 7.3 billion yen (S$114.2 million) for a property in Hiroshima, Japan.

The industrial real estate investment trust continues to see Japan as an important market, despite natural disasters which hit the country this month.

MapletreeLog is buying the freehold Hiroshima Centre, which consists of a two-storey warehouse for cold or frozen storage and a two-storey dry warehouse with an ancillary office. The buildings have a combined gross floor area of about 43,600 square metres.

The property – some 900 kilometres from the north-east coast of Japan where Sendai and Fukushima are – was not affected by the earthquake and tsunami. Nevertheless, MapletreeLog conducted a building audit to make sure that the building structure was intact.

Nippon Access Group, a food distributor in Japan, is renting the property. There are 16 years left on its lease, which allows for a rental review every five years.

Nippon Access is MapletreeLog’s existing client and is leasing space at another two of its properties in Japan. ‘We foresee many opportunities to work with Nippon Access in the future, both in Japan and elsewhere in Asia,’ said Richard Lai, CEO of Mapletree Logistics Trust Management.

According to MapletreeLog, the acquisition of Hiroshima Centre has an initial net property yield of about 7 per cent, and there is potential for organic growth by adding around 45,000 sq m of gross floor area to the property. ‘We will explore this when there is sufficient level of interest,’ Mr Lai said.

Assuming the purchase and other acquisition costs are fully funded by debt, MapletreeLog’s gearing level is expected to increase to around 39.7 per cent.

MapletreeLog had 14 properties in Japan before the acquisition. Out of these, one in Sendai was affected by the disasters. Nevertheless, the Reit still sees potential in the country.

‘We are relieved that Japan has already started taking concrete steps towards recovery. Taking a long-term view, we continue to regard Japan as a key market for MapletreeLog,’ Mr Lai said.

MapletreeLog units closed trading unchanged at 88.5 cents yesterday.