SINGAPORE (Oct 9): OCBC Investment Research continues to rate Mapletree Logistics Trust (MLT) a “buy” with a target price of $1.37.
This came on the back of the trust completing its acquisition of a portfolio of five modern ramp-up logistics properties in Singapore from CWT on Sept 28, following relevant approvals and successful private placement exercise.
See: MLT enters into sale-and-leaseback agreement for 5 local logistics properties worth $778.3 mil
To partially fund this acquisition, MLT completed a private placement in late-Sept to raise gross proceeds of $375 million. Of this about $326.2 million went to partially fund the purchase consideration of $730.0 million; the remaining $48.8 million was used to partially fund the upfront land premium to JTC of about $45.9 million, as well as other expenses incurred.
In a Tuesday report, analyst Andy Wong Teck Ching says, “The acquisition of this portfolio is expected to contribute an initial NPI yield of 6.2%.”
Under this sale-and-leaseback agreement, CWT will become MLT’s top tenant, providing around 9.5% of its gross revenue.
“To address concerns of potential concentration risk, we note that approximately 30% of CWT’s gross revenue to MLT will be contributed by third party end-users under sub-leases,” adds Wong.
On the other hand, MLT’s sponsor, Mapletree Investments, has been active in expanding its global logistics footprint. It announced on Oct 3 that it will be acquiring a portfolio of logistics properties in the US and Europe from Prologis for US$1.1 billion ($1.52 billion).
“While this provides MLT with a potential acquisition pipeline, we believe its focus over the near-term will remain on the APAC region. Thereafter, management would likely be open to exploring opportunities in new markets, in our view, but would evaluate all potential transactions prudently,” says Wong.
This would also give time for Mapletree Investments to stabilise the portfolio of assets acquired in the US and Europe.
As at 11.25am, units in MLT are trading at 1 cent higher at $1.23 or 15.6 times FY19 earnings with a DPU yield of 6.5%.
