The manager of Mapletree Logistics Trust M44U (MLT) is proposing to acquire a modern Grade A warehouse in Farukhnagar, Delhi national capital region (NCR), India. The REIT manager is looking to acquire the property for INR900 million ($14.5 million).
The proposed acquisition will deepen MLT’s footprint in India, which is currently the fifth largest economy in the world. The Indian economy is expected to grow by over 6% in 2023 and 2024; the country is poised to be a key driver of Asian and global growth, says MLT. Delhi, which is the largest metropolitan area in India, achieved a GDP growth of 9.2% and per capita income growth of 7.5% in 2022, higher than the national average.
The property, which is sited on a land area of 51,446 sqm, is located in prime warehousing submarket some 25km from Delhi and 7km from the KMP Highway. It is also located 21km from the country’s National Highway 48, which provides access to Delhi, Gurugram and other major cities including Mumbai and Ahmedabad. It has 38 years remaining on its land lease till December 2061.
The property is a single-storey warehouse that was completed in mid-2022 and built to modern Grade A specifications, including a high floor-to-ceiling height of 12 metres, a strong floor loading capacity of 50 KiloNewtons per sqm and a fire sprinkler system. It has a net lettable area (NLA) of 28,745 sqm and is fully leased to one of India’s largest third-party logistics (3PL) players with a nationwide presence. With a remaining lease of eight years as at Sept 30 and has built-in annual rent escalations, the proposed acquisition will provide the REIT with a stable and growing income stream.
The property was independently valued by Savills at INR922 million as at Oct 31 based on the discounted cash flow method. The proposed acquisition is expected to be accretive to MLT’s distribution per unit (DPU) on a historical pro forma basis.
The proposed acquisition will be fully funded by debt. It is expected to be completed by the 4QFY2023/2024 subject to satisfaction of the relevant conditions precedent. Upon the completion of the acquisition, MLT’s aggregate leverage ratio is estimated to be approximately 38.9% on a pro forma basis.
See also: Changes in ICR, leverage to come into effect immediately, with additional disclosures in March
“Along with our two existing assets in Pune, the proposed acquisition positions MLT strategically to capture opportunities in India, a fast-growing logistics market underpinned by robust domestic consumption and a rising middle class. The proposed acquisition is in line with our continued efforts to rejuvenate our portfolio towards high-yielding, modern assets,” says Ng Kiat, CEO of MLT.
Units in MLT closed at $1.62 on Dec 12.
