SINGAPORE (June 17): Mapletree Investments may strike up to $10 billion of deals annually buying and selling properties as it seeks to set up more private funds over the next five years.
The company prefers to raise funds for acquisitions by selling assets, rather than through bank loans or issuing bonds, Group Chief Executive Officer Hiew Yoon Khong said in an interview. Mapletree is also looking at listing two real estate investment trusts that could be backed by overseas assets in student accommodation and logistics in the next four-to-five years, with a “sweet spot” for each IPO of about $2 billion, he said.
Mapletree, which is owned by Singapore’s state investor Temasek Holdings, currently manages four Singapore-listed REITs and six private real estate funds. Hiew aims to increase assets managed to $90 billion within the next five years, with the company planning to stick to existing asset classes rather than look to new ones. Mapletree owned and managed $55.7 billion of properties as of March 31.
“With our global footprint now, we are increasingly looking at the really big boys, the Brookfields and Blackstones,” said Hiew, who joined the company as CEO in 2003 when it managed just over $2 billion. “Whether it is profitability or operational benchmarks, we are now benchmarked to global companies.”
The firm focuses on logistics, student accommodations, office space, corporate housing and data centers, having expanded in recent years to the US and Europe. Earlier this week, Mapletree announced the acquisition of an office building in Dublin. In May, the group added an office building in Warsaw.
Mapletree’s investment of $3 billion to $5 billion in new assets annually will be funded by divestments of an equivalent size, as this is the company’s approach to recycle capital efficiently, Hiew said.
The company is also looking to syndicate an office fund in Australia this year. On average, the group is looking to seed two new private funds a year over the next five years. In Australia, the company has a corporate housing property in Brisbane and at least eight office properties, according to its 2018 financial report.
Mapletree is also ready to pounce on office properties in Shanghai and Beijing after China’s great deleveraging drive, provided prices fall a bit.
“Because of deleveraging and the trade war, a lot of companies are monetizing some of their assets to strengthen their balance sheets,” said Hiew. “That is driving the increased number of assets for sale, but the price expectation is still quite high.”
Hiew said he expects prices to fall by 10%-15% within the next six to 12 months if the trade war worsens. That would be the prime time to buy property, he added.
Mapletree has 17% of its real estate assets in Hong Kong, and 13% in China, according to its 2018 report.
“Notwithstanding the trade war, we are still confident that if you look at the Chinese economy long-term it is still a very positive economy,” he said.
