MapletreeLog's quarterly DPU rises 9.7%

MAPLETREE Logistics Trust (MLT) delivered a distribution per unit (DPU) of 1.7 cents for the three months ended March 31, 2012, a 9.7 per cent increase from 1.55 cents in the same period last year.

Gross revenue for the quarter was $71.2 million, a 14.4 per cent rise from the year-ago period, while net property income rose 12.3 per cent to $61.4 million.

MLT attributed the improved performance to contributions from properties acquired, as well as 5.6 per cent organic growth from the existing portfolio stemming from positive rental reversions and a high occupancy rate of 98.7 per cent.

The amount distributable to unitholders for the quarter was $41.3 million, up 10.1 per cent year on year.

In June last year, MLT said its financial year-end would be changed from Dec 31 to March 31 each year with immediate effect.

As a result, MLT's FY11/12 comprises five quarters ended March 31, 2012. Figures from this period would not be entirely comparable to those in FY2010, which had four quarters.

On a five-quarter financial year basis ended March 31, MLT delivered a DPU of 8.24 cents. Gross revenue was $339.5 million, while net property income was $293.6 million, resulting in an amount distributable to unitholders of $199.9 million.

MLT's portfolio as at March 31 consisted of 105 properties with an approximate $4.1 billion book value, including a $113 million or 3 per cent revaluation gain following an annual valuation exercise in March 2012.

MLT carried out a round of fund-raising in mid-March, with the issuance of $350 million worth of 5.375 per cent perpetual securities. Proceeds have contributed towards funding of its acquisitions.

Its aggregate leverage at March 31 was 35.2 per cent. This will increase to around 37 per cent on the completion of four announced acquisitions in South Korea and Malaysia.

MLT units remained unchanged at 97 cents yesterday.

ACQUIRES TWO WAREHOUSES IN SOUTH KOREA

• Acquisitions to be DPU-accretive

• Funding via proceeds from perpetuals

• Leverage around 39% post acquisition

Acquisition of two quality warehouses in South Korea

Mapletree Logistics Trust (MLT) announced last Friday evening that it had entered into separate Sale and Purchase agreements to acquire two cold storage warehouses in South Korea, namely Jungbu Cold Warehouse (JCW) and Dooil Cold Warehouse (DCW), for an aggregate purchase price of KRW63.5b (~S$71.3m). This marks MLT’s maiden entry into South Korea’s growing cold storage warehouse market. The two assets, which have a total GFA of 38,800 sqm, are each equipped with over 20 cold chambers that offer temperature control ranging from -5°C to -40°C, and are located in Gyeonggi-do, the largest logistics cluster in the country.

Attractive NPI yields and lease terms

We note that each of the properties will be leased back to the respective vendors for a term of 10 years. The lease terms also incorporate a built-in rental escalation of 3% per annum. Altogether, this provides strong and regular cash flows, as well as organic growth to MLT. In addition, both acquisitions are expected to be DPU accretive, according to management. Specifically, JCW is expected to generate an initial NPI yield of 9.5%, while DCW a yield of 9.9%. These returns are significantly higher than the implied NPI yield of 8.2% for its existing South Korea portfolio of dry warehouses, due to the value-adding building specifications of acquisition assets.

Leverage likely to reach 39% post acquisition

We understand that the acquisitions are expected to complete by Apr 2012. Funding for the investments is expected to come from the proceeds raised from the recent issuance of its S$350m perpetual securities. In addition, MLT’s aggregate leverage post all acquisitions announced to date is likely to reach ~39%. We now factor in the two acquisitions into our forecasts. This raises our FY13-14F revenue and distributable income by 2.4-3.9%. Our RNAV-based fair value, however, remains at S$1.20. Maintain BUY on MLT.

MLT buying two Korean cold storage warehouses

MAPLETREE Logistics Trust (MLT) is acquiring two cold storage warehouses in South Korea for $71.3 million, marking a maiden entry into South Korea’s growing cold storage warehouse market.

Its trust manager, Mapletree Logistics Trust Management (MLTM), has entered into separate sale-and-purchase agreements to acquire these properties located in Gyeonggi-do.

‘These acquisitions are in line with our strategy to scale up our presence in South Korea to a large and profitable asset platform,’ said MLTM chief executive Richard Lai.

MLTM agreed to acquire Jungbu Cold Warehouse, comprising three blocks of cold storage warehouses with three auxiliary buildings, from Chungbu The First Logistics Co for 33.5 billion won (S$37.6 million). This property has a gross floor area of 20,800 sq m.

The other property, Dooil Cold Warehouse, will be acquired from Dooil Cold Store Co Ltd and Woosung Cold Store for 30 billion won. This warehouse comprises three single-storey cold storage warehouses with three auxiliary buildings and has a gross floor area of 18,000 sq m.

Both acquisitions, expected to be completed by April, are likely to be accretive in terms of distribution per unit (DPU) and will bring the total number of cold storage warehouses in MLT’s portfolio to six.

Each of these properties will be leased back to the respective vendors for a term of 10 years with a built-in rental escalation of 3 per cent per annum.

‘We are optimistic about the cold supply chain industry, not just here in South Korea, but also in other parts of Asia where we operate in,’ Mr Lai said. ‘Factors such as rising affluence and higher demand for frozen and packaged food products due to convenience and changing lifestyle all bode well for the industry.’

Based on their respective purchase prices, Jungbu Cold Warehouse is expected to generate an initial net property income yield of 9.5 per cent and Dooil Cold Warehouse is expected to generate a 9.9 per cent yield. This compares to a 8.2 per cent implied property yield from MLT’s existing South Korean portfolio of dry warehouses.

MLTM intends to fund these acquisitions with the proceeds raised from a recent issuance of Singapore dollar-denominated perpetual securities.

With the two new properties, the gross revenue contribution from South Korea to MLT’s total portfolio will increase from 5 per cent to 7 per cent, Mr Lai said.

Including all announced acquisitions to date, MLT’s portfolio will increase to 109 properties with a book value of about $4.1 billion.

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.