Category: MLT
MapleTree – DBS
Acquisitions to drive growth
Comment on Results
MLT reported 2Q07 results in line with our expectations. Gross revenue increased 83% y-o-y to S$34.1m, mainly due to the 30 new properties acquired during the year. Cost efficiencies and economies of scale have also resulted in higher net property income margin. Net distributable income grew 84% y-o-y to S$17.7m.
DPU increased by 33.6% y-o-y to 1.59 cents.
Outlook
To date, MLT has a portfolio of 67 properties with a total value of S$2.2bn(including properties pending completion). Moving forward, MLT is expecting to see more growth coming from outside Singapore. With a ready development pipeline from the sponsor in Vietnam, China and Malaysia, MLT is set to expand its footprint in Asia. In the medium to long term, MLT would also be exploring emerging markets such as South Korea, India, Thailand and Taiwan.
Recommendation
With nine announced acquisitions pending completion (worth around S$166m), there is still an acquisition target balance of around S$200m to S$300m. MLT is on track to achieve its target acquisition pipeline of S$1 bn to reach S$2.4bn by year-end.
Maintain Buy recommendation and target price of S$1.46 (based on DCF Valuation).
MapleTree, MMP – BT
Mapletree Log, Macquarie MEAG Reit post better income
ANOTHER two real estate investment trusts have reported better performances.
For Mapletree Logistics Trust (MLT), gross revenue for Q2 2007 was $34.1 million, up 82.6 per cent year-on-year.
MLT said that this was mainly due to contributions from 30 new properties acquired during the year.
Compared to a book value of $1 billion a year ago, its portfolio of properties has since doubled to reach $2.1 billion as at 30 June.
Net property income for the quarter was $30 million, up 85.9 per cent, while distributable income attributable to unitholders was $17.7 million, up 83.6 per cent.
Distribution per unit (DPU) for the quarter of 1.59 cents was 33.6 per cent higher year-on-year and 7.4 per cent higher than the previous quarter.
Reiterating MLT’s ‘growth by acquisitions’ strategy, Chua Tiow Chye, CEO of Reit manager Mapletree Logistics Trust Management Ltd (MLTML) said: ‘For the current year-to-date, we have completed $654 million of acquisitions and have another $166 million of acquisitions that have been announced but are pending completion. This means we have achieved 82 per cent of our $1 billion target for 2007.’
Mr Chua also said the MLT’s funding structure will continue to be optimised.
As at June 30, MLT’s leverage ratio was 54 per cent compared to 39 per cent as at March 31, 2007.
At the end of Q2 2007, 55 per cent of MLT’s total borrowings of $1.182 billion were hedged, he added.
In January, MLT raised $349 million through a fund-raising exercise, offering 296.8 million new units. MLTML deputy CEO and CFO Richard Lai said it was ‘exploring various options of going to the markets for fund raising’ for future acquisitions. MLT expects to have a portfolio worth $5 billion by 2010.
About 20 per cent of its future pipeline will come from sponsor Mapletree Investments which is developing projects in Vietnam, China and Malaysia.
MLT’s share price closed at $1.33 per unit, down 3 cents from the previous day.
Separately, Macquarie MEAG Prime Real Estate Investment Trust (MMP Reit) reported yesterday that gross revenue for Q2 2007 increased 5.5 per cent year-on-year to $23.6 million, due mainly to higher-than-expected rents achieved for retail space in the basement of Wisma Atria, as well as for office space.
Contributions from six newly acquired properties in Tokyo were also booked for the first time.
Net property income was up 3.5 per cent at $17.9 million while distributable income was $14.3 million, up 4.7.
The DPU of 1.50 cents for the quarter was 4.2 per cent higher compared to the 1.44 cents achieved for the previous corresponding period.
MMP Reit share price ended the trading day at $1.25 unchanged.
MLT – SGX
MAPLETREELOG ACQUIRES HONG KONG PROPERTY FOR HK$66 MILLION
The vendor of Shatin 5 is Ever Gain Company Limited (“Ever Gain”), who will lease back the property for 5 years. The acquisition will be accretive to MapletreeLog’s distribution per unit (“DPU”). The pro forma financial effect of the acquisition on the DPU for the financial year ended 31 December 2006 is an additional 0.01 Singapore cents per unit.
Rationale for the acquisition
Hong Kong’s economy has been experiencing three years of high growth, supported largely by domestic and external demand. Hong Kong’s close ties with mainland China has benefited the economy in several ways, most importantly through the re-export of PRC goods. Confirming this trend, Jones Lang LaSalle’s Q1 2007 market research showed increased demand for warehouses in Hong Kong. The rising demand for warehouse space from businesses supporting the China hinterland, coupled with the limited supply of new logistics space in Hong Kong, is expected to sustain positive rental reversions. The recently completed Hong Kong-Shenzhen Western Corridor as well as the Route 8 linking Hong Kong International Airport to Shatin, which is expected to complete in mid-2009, will further enhance the connectivity of the Shatin area. This will generate further demand for logistics real-estate in the area.
Mr. Chua Tiow Chye, Chief Executive Officer of MLTM, said, “We are very pleased with this acquisition in Fo Tan, Shatin, an established logistics and industrial area in Hong Kong. This area is ideally located, being mid-way between the Chinese border and the Kwai Chung container terminal. This will be our fifth property in the Shatin area, bringing our total warehouse space in this area to approximately 163,000 sqm. With a suite of properties in this vicinity, we have the capacity and flexibility to meet tenants’ various needs. This consolidates our position as a leading logistics real-estate solution-provider in this area,” Mr. Chua said.
“This acquisition marks the strong relationship which we have with the Ever Gain group, Mr Chua said. “We are happy to partner Ever Gain by providing solutions to its real-estate needs as it expands in Hong Kong and China.”
Funding
The acquisition is expected to be completed by 3Q 2007. From MapletreeLog’s perspective, the Manager intends to fund the acquisition entirely by debt. However, this does not preclude the Manager from exploring alternative means of funding should the need arise.
General Description of the property
Shatin 5 property comprises 71,030 sq ft of space located between the fifth floor and the ninth floor of a 19-storey (including Ground Floor) warehouse cum industrial building. It is in Fo Tan, Shatin, an established industrial and commercial area in Hong Kong. The property has easy access to major transportation infrastructure which links the Shatin area to both the Chinese border and the Kwai Chung Container Port. The property has been valued at HK$70.4 million (S$13.7 million1) by DTZ Debenham Tie Leung Limited, dated 21st June 2007.
MLT – SGX
MAPLETREELOG ACQUIRES PROPERTY IN CHINA FOR RMB155 MILLION
Singapore, 5 July 2007 – Mapletree Logistics Trust Management Ltd. (“MLTM”), manager of Mapletree Logistics Trust (“MapletreeLog”), is pleased to announce that MapletreeLog has signed a Reservation Agreement to acquire three warehouses in Putuo District, Shanghai, China for RMB155 million (S$31 million1) from Shanghai Shunjie Logistics Co., Ltd (“Shanghai Shunjie”) and Longtong Warehouse Management (Shanghai) Co Ltd. The properties (“Northwest Property”) will be purchased by MapletreeLog’s wholly foreign-owned enterprise to be incorporated in China.
Northwest Property will be purchased with assignment of existing leases. The tenants are a Spanish discount supermarket operator, a leading car maker in Japan and an American-based information technology wholesale distributor providing sales, marketing and logistics services for the IT industry. All three tenants are well-established multi-national companies. Shanghai Shunjie will take up the remaining space in the property for its logistics operations. Shanghai Shunjie is a local third party logistics company with nearly 20 years of experience in logistics operations. They provide a full range of logistics services such as airfreight, road transportation, railway, express delivery and storage, including inbound as well as outbound services.
Northwest Property is located in Northwest Logistics Park, Jinda Road, Putuo District, Shanghai. The acquisition will be accretive to MapletreeLog’s distribution per unit (“DPU”) and the pro forma financial effect of the acquisition on the DPU for the financial year ended 31 December 2006 would be an additional 0.04 Singapore cents per unit2.
Benefits and rationale of the acquisition
Mr. Chua Tiow Chye, Chief Executive Officer of MLTM, said, “We are very pleased with this acquisition which strengthens our presence in Shanghai. This follows our purchases of Ouluo Distribution Centre in Shanghai, Xi’an Seastar Distribution Centre and our announced acquisition of the American Industrial Park in Guangzhou. This acquisition, our fourth in China, consolidates MapletreeLog’s position in Shanghai, which is the first choice for many international companies to set up distribution centres in eastern China. The Northwest Logistics Park area is a wellestablished logistics hub and the acquisition of a good asset in this choice location will entrench our presence in Shanghai. We are also very happy to welcome the four quality names into our family of tenants.”
“The continued economic growth and emerging affluent middle class have resulted in the rapid urbanization and consumption trends in China. Distribution centres play an important role in the supply chain of moving goods across China. The acquisition of Northwest Property will allow us to capitalise on these growing and increasing important retail and wholesale sectors,” Mr. Chua said.
According to Jones Lang LaSalle, growth in China’s property market for warehousing and distribution centres is likely to take off in 2007 as global retailers expand aggressively in the country3.
In the International Monetary Fund’s April 2007 World Economic and Financial Surveys, China has seen an increase in its production capacity and capability. In many sectors – notably aircraft, home electrical appliances, industrial machinery, precision apparatus and automobiles – export of final products have continued to grow strongly. Retail sales grew by over 13 percent in 2006, with car sales rising by nearly 25 percent.
Funding
The acquisition is expected to be completed by early 2008. From MapletreeLog’s perspective, the Manager intends to fund the acquisition entirely by debt. However, this does not preclude the Manager from exploring alternative means of funding should the need arise.
General description of the property
Northwest Property comprises three single-storey warehouses with an ancillary office building and a four-storey building used as dormitory.
Northwest Property is located in Jinda Road, Putuo District, Shanghai. It is about 1 km to Huning highway and Huning railway. Situated 5 km from Hongqiao Airport, it has easy access to downtown Jiangsu and Zhejiang Province.
1 Based on exchange rate of S$1.00 to RMB5.03
2 Assuming that MapletreeLog had purchased, held and operated the subject property for the whole of the financial year ended 31 December 2006 (based on 41 properties) and that the acquisition is fully funded by debt.
3 Reuters, “Big retailers fuel China’s logistics growth”, 8 March 2007
Source : SGX