The manager of Mapletree Logistics Trust M44U (MLT) M44U has announced the proposed acquisitions of three strategically located, Grade A assets for a total acquisition cost of approximately $234.0 million.
On Feb 29, MLT announced the entry into sale and purchase agreements for a logistics property located in Malaysia and two logistics properties located in Vietnam from wholly-owned indirect subsidiaries of Mapletree Investments, the sponsor of MLT.
The agreed property values of the Malaysia property and Vietnam properties are MYR558.8 million ($157.9 million) and VND1,254,523 million ($68.4 million), respectively, for a total agreed property value of $226.3 million.
The proposed acquisitions are in line with the manager’s strategy of active portfolio rejuvenation to enhance MLT’s portfolio through accretive acquisitions of modern, well-located properties in key logistics hubs.
The acquisitions are expected to expand MLT’s presence in Malaysia and Vietnam, where robust economic growth and increasing urbanisation are expected to boost consumption and underpin demand for logistics space.
Ng Kiat, CEO of the manager, says “Stepping up our portfolio rejuvenation efforts, we have announced or completed over $200 million of divestments year-to-date, releasing capital which can be redeployed towards acquisitions.”
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According to the manager, the acquisitions will also deepen MLT’s network connectivity in these growth markets and position the trust to capitalise on favourable demand drivers for logistics space, such as growing consumption and greater focus on supply chain diversification.
The manager notes that with businesses shifting from their traditional focus on efficiency to security and resilience, Malaysia and Vietnam have been key beneficiaries in part due to their competitive labour costs, skilled workforces and supportive government policies.
“Strategically located in logistics hubs serving the growing consumption bases in Kuala Lumpur, Ho Chi Minh City and Hanoi, these acquisitions position our portfolio to capture emerging Asia’s growth potential. At the same time, developed Asian markets, which account for the majority of our revenue base, continue to provide stability to MLT’s portfolio,” Ng says.
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The manager intends to finance the proposed acquisitions through a mix of debt and part of the sale proceeds from divestments in recent quarters. MLT’s aggregate leverage is expected to increase from 38.8% as at Dec 31, 2023, to 39.6% on a pro forma basis after financing the acquisitions.
The Malaysia property is expected to generate an initial net property income (NPI) yield of approximately 5.7%, while the Vietnam properties are expected to generate an initial NPI yield of approximately 7.5% based on the agreed property values of MYR558.8 million and VND1,254,523 million respectively.
Based on the proposed method of financing, the manager expects the acquisitions to be accretive to MLT’s distribution per unit (DPU) on a historical pro forma basis.
Units in MLT closed 1 cent higher or 0.6% up at $1.48 on Feb 29.
