MLT – BT

Mapletree Logistics Trust buys Japan properties for 17.5b yen

Weighted average net property income yield to rise to 6.2% from 5.6% now

MAPLETREE Logistics Trust (MLT) has bought seven dry warehouse facilities from Goodman Japan for a total of 17.5 billion yen (S$268.7 million).

Located in the Hokkaido, Greater Tokyo, Nagoya, and Osaka regions, the facilities will add 124,300 square metres of floor space to MLT’s portfolio.

Mainly serving inland logistics requirements, the assets have a weighted average building age of 4.9 years. The properties are fully leased to single users that are engaged mainly in the food and consumer product industries.

The properties are leased for the next five to 25 years with a weighted average lease expiry of 9.3 years.

According to Mapletree Logistics Trust Management (MLTM), the acquisition is expected to generate a stabilised weighted average net property income (NPI) yield of about 6.2 per cent, versus the implied NPI yield of 5.6 per cent for MLT’s existing Japan portfolio.

The acquisition is also expected to rev up gross revenue contribution from the Japan portfolio to 29 per cent of MLT’s overall gross revenue, from 24 per cent.

‘As some of the assets have yet to reach their maximum permissible plot ratio, we are excited with the opportunity for organic growth which can potentially generate an additional 30,000 sq m of gross floor area, as and when required by customers,’ said Richard Lai, chief executive officer of MLTM.

‘We will also work to extract more value from our Japan portfolio, for instance through asset enhancement initiatives.’

Following the acquisition, MLT’s customer profile will be widened, with the addition of six lessees, four of which are new customers to MLT.

MLTM said: ‘Demand for large, high quality logistics facilities in Japan has been on the rise after the earthquake last year as firms seek to improve supply chain management and crisis management capabilities. New supply of logistics facilities has been limited, especially in Greater Tokyo where 70 per cent of the acquisition portfolio is located.’

All seven properties are located more than 20 kilometres away from the coastline and have a probable maximum loss value of less than 15 per cent, indicative of a low exposure to tsunami and earthquake risks.

In a report issued yesterday, DBS Vickers said that the acquisition ‘further highlights the stability of MLT’s cash flows going forward’, given that the Japan segment ‘typically enjoys minimal income volatility and good visibility as the majority of the leases are tied on a long-term basis’.

As at end-2011, MLT had a portfolio of 98 logistics assets in Singapore, Hong Kong, Japan, China, Malaysia, South Korea, and Vietnam, with a total book value of over S$3.7 billion.

The MLT counter closed half a cent down yesterday, at 91 cents.