Category: MLT
MapleTree – BT
MapletreeLog buys warehouse in S Korea
MAPLETREE Logistics Trust (MapletreeLog) yesterday said it has agreed to acquire a warehouse in South Korea for 11.6 billion won (S$17.7 million), which will add 0.02 Singapore cents to its pro-forma distribution per unit.
The property is a two-storey warehouse/ distribution centre located in the established logistics cluster of Kyungki. It has a temperature-controlled section and a three-storey office building. Valued at 13.5 billion won, the property is located on freehold land, with a GFA of about 10,911 sq m.
The vendor of the property is Oakline Co, which will lease back the property for a period of four years. MapletreeLog intends to fund the acquisition wholly by debt, but does not rule out alternative means of funding as well.
‘We are very pleased with our first acquisition in South Korea as we continue to expand our footprint in Asia, diversifying our revenue streams across various countries,’ said Chua Tiow Chye, CEO of Mapletree Logistics Trust Management, which manages the trust. ‘This will be the sixth Asian market which MapletreeLog will have assets in.’ Mr Chua added that MapletreeLog will continue to grow its presence in the South Korean logistics real estate sector, seeing that it is a relatively well-developed market.
MapleTree – OCBC
For higher-risk appetite investors
Cash call as expected. In our Dec 2007 report on Mapletree Logistics Trust (MLT), we articulated that MLT was likely to raise fresh equity within the next two quarters. This was based on the assumption that MLT’s gearing would breach the 60% allowable limit if all its recently announced acquisitions would be debt funded. Indeed, MLT has recently announced that it is seeking fresh equity of S$400m to S$500m via a rights issue. We estimate that if the proposed right goes through successfully, MLT’s gearing would fall to a more acceptable level of about 40%.
Some uncertainties. In the current climate of market volatility and sub prime woes, cash calls are unlikely to be well received. This is clearly reflected by a REIT’s recent cash call in the market which had to be priced much lower than expected. Furthermore, unlike other REITs which acquire assets conditional on successfully raising fresh equity, MLT’s financing model works on the basis of “buy now with debt and refinance later with equity”. This model has two weaknesses in that it exposes MLT to the volatility of the capital markets, and secondly as cash call is delayed until gearing limit is reached, it does not leave much room for maneuvering. In other words, MLT is totally exposed to the demands of the capital markets.
Parent underwriting the rights. The key issue is the pricing of the rights. Obviously the lower the price, more units will be issued and hence the dilutive impact would be greater. The good news is that in the case of MLT’s rights, its parent Mapletree Investment Pte Ltd (MIPL) has agreed to underwrite the issue by buying up all unsubscribed rights. This in turn should help support pricing of the rights and hopefully not lead to DPU dilution.
BUY, but for higher-risk appetite investors only. In the current uncertain capital market climate, it may be better to be less dependent on the capital markets. In that context, a more conservative growth strategy is perhaps more appropriate. As we had articulated in our 2008 sector report, the industrial sector is not our choice sector as we see many risk factors. However, corporate development could possibly be a catalyst to MLT’s unit performance. Nevertheless, we emphasize that MLT is meant only for investors with higher-risk appetite and longer investment horizon. We maintain BUY with a fair value of S$1.31.
Mapletree – SGX
ANNOUNCEMENT
PROPOSED RENOUNCEABLE RIGHTS ISSUE OF NEW UNITS
Introduction
Indicative Terms of the Rights Issue
The following indicative terms are based on the Manager’s assessment of current market conditions and MapletreeLog’s funding requirements and are subject to change. The Manager intends to carry out the Rights Issue to raise estimated gross proceeds of between S$400.0 million and S$500.0 million. Based on current market conditions, the Manager expects the price of the Rights Units (the “Rights Issue Price”) to correspond to a discount of no more than 20.0% to the theoretical ex-rights price (“TERP”). The TERP is calculated as follows:
TERP = (Market capitalisation of MapletreeLog prior to the Rights Issue(1) + gross proceeds from the Rights Issue)/Units outstanding after the Rights Issue
Note:
(1) Such market capitalisation will be calculated based on the volume weighted average price for a Unit for all trades on the SGX-ST for a period of time prior to and including the last day of cum rights trading in relation to the Rights Issue. The period will be determined and disclosed by the Manager in the notification to Unitholders stating the time and date on which the transfer books and register of Unitholders will be closed to determine the provisional allotments of eligible Unitholders to the Rights Issue (the “Notice of Books Closure Date”).
The Unitholders’ Circular will contain further details regarding the Rights Issue, and will reflect market conditions and MapletreeLog’s funding requirements prevailing at the time of issue of the Unitholders’ Circular.
The rights ratio which will set out Unitholders’ provisional allotment of new Units under the Rights Issue will be disclosed in the Notice of Books Closure Date. The Rights Issue Price will be determined closer to the commencement of the Rights Issue, and will be disclosed in the offer information statement in relation to the Rights Issue to be lodged with the Monetary Authority of Singapore and issued to Unitholders (the “Offer Information Statement”).
The Rights Units represented by the provisional allotments of (i) eligible Unitholders who decline, do not accept, and elect not to renounce or trade their provisional allotments of Rights Units under the Rights Issue (during the provisional allotment trading period prescribed by the SGX-ST) and/or (ii) ineligible Unitholders, will be issued to satisfy excess Rights Units applications as the Manager may, in its discretion, deem fit. In the allotment of excess Rights Units, preference will be given to rounding of odd lots, followed by allotment to Unitholders who are neither substantial Unitholders nor directors of the Manager. Substantial Unitholders (including Mapletree Investments Pte Ltd (“MIPL”) and its subsidiaries, such as the Manager) and directors of the Manager will rank last in priority.
The Rights Issue is subject to, inter alia, the receipt of in-principle approval from the SGX-ST for the Rights Issue, the approval of Unitholders at the EGM for the Rights Issue, the lodgement of the Offer Information Statement and prevailing market conditions at the relevant time.
Rationale for the Rights Issue
In view of current market conditions, the Manager believes that a rights issue is the most appropriate method of raising equity.
The Rights Issue will provide financial flexibility to enable MapletreeLog to finance its strong acquisition pipeline and pursue its objective of delivering total returns in the form of distribution yield and capital growth to Unitholders. The Rights Issue will also strengthen MapletreeLog’s balance sheet and capital structure.
Use of Proceeds
The proceeds of the Rights Issue will be used to, inter alia, partly or fully finance the acquisition of certain properties which the Manager is acquiring and partly or fully refinance certain loan facilities drawn down for the purpose of the acquisition of certain properties, with the balance of the proceeds to be used for other general corporate and working capital purposes.
Undertaking by MIPL
To demonstrate its support for MapletreeLog, MIPL, which owns an aggregate interest of approximately 30.2% in MapletreeLog through its wholly-owned subsidiaries as at the date of this announcement, has provided an irrevocable undertaking (the “MIPL Undertaking”) that:
(i) it will, directly and/or through one or more of its wholly-owned subsidiaries, take up the entire provisional allocation of Rights Units of MIPL and its wholly-owned unitholding subsidiaries under the Rights Issue; and
(ii) it will, directly and/or through one or more of its wholly-owned subsidiaries, make excess application(s) for any Rights Units not subscribed for at the close of the Rights Issue after satisfaction of all other applications and excess applications (if any) for the Rights Units (the “MIPL Excess Application”).
On 21 December 2007, the Securities Industry Council granted, in connection with the MIPL Undertaking, a waiver of the requirement by MIPL to make a mandatory offer for Units under the Singapore Code of Take-over and Mergers as a result of the MIPL Excess Application subject to, inter alia, the approval by independent Unitholders at general meeting of a resolution to waive their rights to receive a general offer from MIPL.
The MIPL Undertaking will enhance the objective of a successful Rights Issue.
Approval from SGX-ST
The issue of the Unitholders’ Circular is subject to the in-principle approval of the SGX-ST for the Rights Issue. The Manager will announce the receipt of the approval of the SGX-ST for the Rights Issue once this has been received.
Source: SGX
MapleTree – SGX
MAPLETREELOG ACQUIRES 8th PROPERTY IN JAPAN FOR S$18 MILLION
(1) Based on exchange rate of S$1.00 = JPY80.19
(2)Assuming MapletreeLog has purchased, held and operated the property for the financial year ended 31 December 2006 (based on 41 properties) and that the acquisition is 100% debt-funded.
More Information, Click Here
MapleTree – OCBC
Upgrade on recent correction
Growth again due to acquisitions. Mapletree Logistics Trust (MLT) reported another good set of results. 3Q07 revenue was up over 79% YoY and 11% QoQ at S$38.5m, and distributable income improved 79% YoY and 8% QoQ to S$19.1m. Distributable income per unit (DPU) was in line with sequential bottom-line growth, improving by 30% YoY and 8% QoQ to 1.72 cents. The result is better than OIR’s forecast of 1.50 cents. The bulk of the sequential growth came from the acquisition of 9 properties bought over the previous quarter. MLT management indicated that earnings from acquisitions generally lag by about a quarter. In 3Q, only 3 assets were completed so we cannot expect a robust growth in 4Q07. Finally MLT has about 13 properties pending completion worth about S$295m and when completed, its asset value should rise to about S$2.43b from S$2.13b at 3Q07.
Likely penetration of Vietnam and South Korea. Presently MLT’s income exposure continues to be Singapore biased. Singapore makes up about 52% (58% in 2Q07) of group NPI, followed by Hong Kong (30%), Japan (13%), Malaysia (3%) and China (2%). Going forward into 2008, we expect MLT to continue to diversify its income and to enter into more new markets. Vietnam is likely to be the next new market followed by South Korea, Vietnam and possibly even India.
Gearing limit to be reached soon. Since its 2Q07 results, MLT has announced 4 more acquisitions. These assets to be acquired will cost a total of S$129m. Together with previously announced acquisitions, MLT has or will be spending a total of S$295m. The implication is that its asset base will increase from S$2.13b (at 3Q07) to S$2.43b fairly soon. As all the recently announced acquisitions are likely to be debt funded, MLT’s gearing will rise to 62%. The implication is that an equity raising exercise is probably on the cards within the next 6 months.
Upgrade to buy on recent correction. Since our HOLD downgrade in May, MLT has corrected nicely from S$1.48 to the present S$1.19 or by about 20%. More importantly, its price to book ratio has also come down from over 1.74x in May to a more reasonable 1.42x now. Our previous downgrade was purely on the back of valuation, so in light of the recent correction we are seeing value in MLT. We thus upgrade our rating on MLT from a Hold to BUY and keep our fair value of S$1.50.