6 Key Things To Know About Mapletree Logistics Trust
Mapletree Logistics Trust (“MLT”) is Singapore’s first Asia-Pacific focused logistics real estate investment trust. Listed on the Singapore Exchange Securities Trading Limited in 2005, MLT invests in a diversified portfolio of quality, well-located income producing logistics real estate in Singapore, Hong Kong, Japan, Australia, South Korea, China, Malaysia and Vietnam. It has a portfolio of 127 properties which are valued at SGD5.5 billion dollars as at 31 March 2017.
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Stock Information
Ticker Symbol: SGX:M44U
Market Cap: SGD4.16 billion (Updated 10 January 2018)
Market Price / Share: SGD1.35 (Updated 10 January 2018)
Sector: Real Estate Investment Trust
Source: Google Finance
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Acquisition and Divestment
On 30 June 2017, MLT entered into a sale and purchase agreement with Godo Kaisha Asset Toshi Jigyo 4 Go for proposed divestment of Zama Centre and Shiroishi Centre in Japan, with a total sale consideration of JPY13,500 million. Due to old warehouse specifications, limited future income growth and lack of redevelopment potential, MLT concluded that divesting the properties is desirable in the interest of MLT’s unitholders. The 2 properties were purchased for JPY12,309 million in 2007. The agreed sale consideration of JPY13,000 is 10% above the purchase price.
On 3 August 2017, MLT has entered into an Option to Purchase agreement with Venus Beauty Pte Ltd for the proposed divestment of 4 Toh Tuck Link in Singapore at a sale price of S$14.51 million. Due to limited scope to increase the gross floor area of the property and given its small land area, there is limited potential for redevelopment into a modern, ramp-up logistics facility. The property was acquired in 2006 for S$11.0 million. The proposed divestment is expected to complete by September 2017.
On 11 August 2017, MLT has entered into an Option to Purchase for the proposed divestment of 7 Tai Seng Drive in Singapore at a sale consideration of S$68.0 million. MLT management is looking to divest the property due to its old warehouse specifications and limited scope for future enhancement. The capital released will increase MLT’s financial flexibility to invest in better quality assets with modern specifications. The property was acquired in 2006 for S$38.0 million. The sale consideration of S$ 68.0 million is 79% above the original purchase price.
28 August 2017, MLT has proposed an acquisition of Mapletree Logistics Hub Tsing Yi in Hong Kong, with a purchase consideration of approximately HK$4.8 billion. As Hong Kong has consistently been one of MLT’s best-performing markets and continues to grow, acquiring the property is a major step to strengthen MLT’s presence in Hong Kong, which is an attractive logistics market. With its prime logistics location, modern specifications and 100% committed occupancy with quality tenants, the acquisition will increase MLT’s income and tenant diversification. The property is expected to provide an NPI yield of 5.7%.
5 December 2017, MLT entered into a Sale and Purchase Agreement for the divestment of Senai-UPS in Malaysia at a sale price of MYR28.0 million. The property has been 51% occupied since early 2015 when the existing tenant reduced its leased space. Given the property low yield and limited future income growth, MLT’s management concluded that divesting the property at the offered price is desirable in the interest of MLT’s unitholders. The property was acquired in 2007 for MY 25.5 million. The proposed divestment is expected to complete by the fourth quarter of FY17/18.
On 5 January 2018, MLT entered into a Sale and Purchase Agreement for the acquisition of the remaining 38% in strata share value of Shatin No.3 in Hong Kong for a purchase consideration of HKD610.0 million. With this acquisition, MLT’s interest in Shatin No.3 will increase to 100%. The property has a consistent track record of strong operating performance since acquisition in 2006. Upon acquisition, MLT will gain full control and flexibility to add value to the property through active asset management. The acquisition is expected to complete by January 2018.
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Key Opportunities
Strong Presence in Asia Pacific Region
Mapletree Logistics Trust has a strong presence in Asia Pacific Region, with over 125 properties located in 8 countries. MLT has been continually building up their scale and strengthening their presence through selective and disciplined acquisitions of quality and well-located assets. With its geographically diversified portfolio, softer performance in some countries such as Singapore and South Korea could be mitigated by strong results in other markets like Hong Kong and Australia.
Source: Mapletree Logistics Trust 2016/2017 Annual Report
Rise of e-Commerce
Mapletree Logistics Trust has been benefiting from the rising demand for warehouse space due to the rise of E-Commerce especially in South Korea and China. In South Korea logistics property market, demand for Grade-A logistics properties in prime areas remained strong, driven by growing requirements from the e-commerce, cosmetics, fashion apparel and 3PL sectors. Moving forward, MLT anticipates demand for grade-A warehouses to continue expanding, underpinned by increasing requirements from logistics service providers and growth of e-commerce. In China logistics property sector, healthy domestic consumption contributed to the firm demand for warehouse space. Online retail continued to gain market share, with e-commerce related 3PLs now the primary demand driver in the Chinese logistics market. Demand from e-commerce companies led to the net take-up of logistics space in Tier 1 cities such as Shanghai and Guangzhou. Looking ahead, demand for modern logistics warehouses in China is projected to remain healthy, on the back of rising domestic consumption and the continued growth of e-commerce.
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Key Risks
Uncertain and Volatile Global Economic Climate
The global economic climate has been uncertain and volatile. This would have some major impact on business confidence in the markets where rental and occupancy rates came under pressure. Particularly in Singapore, warehouse sector continues to be weighed down by global economic uncertainties. In the Singapore market, warehouse rents fell 6.4% year on year while occupancy rate declined from 91.4% in 4Q 2015 to 89.7% in 4Q 2016. The supply-side pressure is likely to prevail in Singapore and certain Tier 2 Chinese cities in the near term.
Excess supply of warehouse space
There is excess supply of warehouse space in several markets such as Singapore, South Korea and China. In Singapore, a new supply of warehouse space is expected to remain significant at 1.2 million sqm over the next few years, with the bulk of it coming on-stream in 2017. Strong headwinds in most industries coupled with the significant upcoming new supply of warehouse space will likely continue to exert pressure on rentals and occupancy rates. In South Korea, warehouse with older specifications facilities is facing pressure on rentals and occupancy rates. Whereas in China, Tier 2 cities such as Wuxi and Wuhan likely continue to face pressure from a short-term oversupply of warehouse space.
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Valuation
As at 10 January 2018, RHB Bank Berhad is trading around 13.07 times its earning and 1.07 its book value. Besides, it offers a dividend yield of 4.95%.
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Investor Relations
Annual Relation Material:
For Investors Enquiries
Ms Lum Yuen May
Vice President, Investor Relation
Telephone: +(65) 6377 6111
Email: Ask-MapletreeLog@mapletree.com.sg
Top Shareholders (14 February 2017)
- Citibank Nominees Singapore Pte. Ltd. – 18.42%
- Mulberry Pte. Ltd. – 14.05%
- Meranti Investments Pte. Ltd – 12.73%
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About The Author
Kent Chong
Kent is an economics and finance second-year student from RMIT University. He learned investing in stock market the hard way, from studying technical chart, trading stocks from hearsay, and even bought some stocks that were recommended by stock broker. After making some losses in the market for some time, he fortunately bumped into an online value investing course and learned about value investing. Since then, he started to read about value investors like Warren Buffett, Charlie Munger and Howard Marks. He believes that value investing is a continuous learning process, like Munger once said: “Those who keep learning, will keep rising in life.”