MAPLETREELOG ACQUIRES HONG KONG PROPERTY FOR HK$66 MILLION

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23-Mar-2007

Biggest acquisition to date

MLT has acquired five logistics facilities in Japan from Itochu Corp for ¥27.8bn S$350.8m). Four of the properties are located in the Greater Tokyo area and the fifth in the Kyoto (Kansai) area. All five properties are freehold and have a total GFA of 103,864 sq m. The multi-tenanted assets come with long lease tenures of 7-18 years. The acquisition is expected to be completed by mid-2007.

Second acquisition in Japan, following the completion of the purchase of Gyoda Distribution Centre (S$24.4m, floor area 17,094 sq m; also from Itochu) last month. This is also the largest acquisition by MLT since its listing two years ago, beating its S$211.1m acquisition of Hong Kong’s Shatin No. 4 (floor area 60,215 sf) in April last year.

Demand for quality logistics space in Japan is rising, according to Colliers International. There is now a shortage of large high-quality distribution centres in key areas and modern distribution facilities with floor areas of over 3,000 sq m make up less than 50% of the total stock in Japan. The five properties that MLT has acquired have floor areas of above 3,000 sq m, with the biggest measuring 41,171 sq m.

Initial yield lower than expected. The acquisition will be funded entirely by debt as MLT wishes to take advantage of the low cost of borrowing in Japanese yen. The resulting proforma accretion to MLT’s FY06 DPU is 0.56ct (+11%). Assuming a cost of debt of 1% and a weighted average management fee of 2%, we estimate the average initial yield of the assets at 4.3%. While this is lower than the weighted average yield of 4.9% that we had assumed for MLT’s acquisitions this year, we expect the impact to be offset by acquisitions of higher-yielding assets in other markets such as China later in the year.

Valuation and recommendation

Reaching our target price; downgrade to Neutral. With the acquisition of these five properties, MLT’s total assets now amount to just under S$2bn (including acquisitions that are pending completion). We had projected an increase of S$1bn in asset size to S$2.4bn by the end of this year. We believe MLT is on course to meet our target. As such, our DPU forecasts and DDM-target price of S$1.32 remain unchanged. With the REIT trading near our target price, we downgrade MLT to Neutral from Outperform. Above-average forward yields of 4.5-5.6% are expected to support MLT’s share price.

BT, January 18, 2007, 10.49 am (Singapore time)

Mapletree to raise US$227m in new units

SINGAPORE - Singapore's Mapletree Logistics Trust Management Ltd (MLTML), an industrial property trust, said on Thursday that it was raising up to $349 million (US$227.1 million) by selling new units to finance the acquisition of eight overseas properties.

Mapletree is placing up to 283.85 million new units with institutional investors at an issue price of between $1.13 and $1.18 per unit.

Retail investors will be offered 25 million new units at an issue price of $1.13 per unit.

The real estate investment trust has acquired one property in Singapore, one in China, one in Japan and five in Malaysia. DBS Bank, Deutsche Bank and UBS are joint lead managers and underwriters of the issue. -- REUTERS

Extracts fm CIMB report dated 17-Jan-07,

Keep the assets coming

• Full year below expectations. FY06 DPU of 5.1cts is 2% short of our forecast but in line with consensus estimate. A larger mix of multi-tenanted acquisitions compressed MLT’s NPI margin, which came in below expectations. Gross rental revenue surged 167% yoy to S$26.9m in 4Q06, on account of a larger portfolio of S$1.4bn at end-FY06 vs. S$462m a year ago. Jurong Logistics Hub, MLT’s largest property in Singapore to date, also began contributing in 4Q06. Overall occupancy was 99.6% while renewed rent rates were on average 7.1% higher than the rates in 4Q06. MLT’s gross gearing remained manageable at 55%.

• Portfolio to grow by another S$1bn this year. MLT has announced S$221m worth of acquisitions scheduled for completion by 1Q07. These acquisitions will bring MLT’s assets to S$1.6bn. MLT will have additional debt headroom following the latest round of equity fund-raising (assuming unitholders’ approval is secured today). As such, we believe MLT is financially equipped to meet our portfolio target of S$2.4bn by end-FY07.

• Overseas properties from sponsor. Two overseas properties that sponsor Mapletree is developing – Lingang Free Port (S$39m, GFA 46,500 sq m) in China and the Vietnam Singapore Industrial Park (VSIP 1, GFA 23,600 sq m), are near completion. Pre-leasing activities have begun for both properties, which could be injected into MLT as soon as this year.

• Introducing FY09 DPU forecast. Assuming MLT’s assets grow from S$3.4bn in FY08 to S$4.4bn by end-FY09, with the acquisitions financed by 45% debt and 55% equity, we initiate our FY09 DPU forecast of 7.1cts. Our FY07-08 DPU forecasts remain intact, translating into forward yields of 4.8-5.8%, which are attractive compared with the average 4.5-5% that S-Reits currently offer.

• Maintain Outperform. Our DDM-based target price of S$1.32 remains relevant. At our FY07 DPU forecast of 5.8cts, prospective dividend yield is 4.4%. This is in line with the FY06 dividend yield that MLT trades at. MLT has met its portfolio target in its first full year of operation. Its expansion pipeline remains solid and it remains one of the fastest-growing Reits in Singapore. Maintain Outperform.

Extracts fm DBSVickers report dated 29-Dec-06,

The growth story continues

Equity fund raising. MLT has proposed to raise gross proceeds of around S$349m to part finance a target acquisition of 15 properties in Singapore, the PRC, Japan and Malaysia. Part of the proceeds will also be used for part re-financing existing properties in the portfolio previously acquired by MLT. Assuming paring down debt by S$197.6m and reducing gearing from 49% to 40% after new acquisitions and refinancing of recent acquisitions, about S$808.8m additional debt capacity would be created which offers more flexibility for future acquisitions.

Acquisitions pipeline going strong. MLT has been experiencing growth through acquisitions and after acquisitions its portfolio will comprise 56 assets located across Asia. MLT expects to achieve S$5bn worth of assets under management by 2010 and for a bigger revenue contribution from China in 2007. Recently, MLT also ventured into the Japanese market, acquiring Gyoda Distribution Centre. We expect this acquisition to be of benefit for MLT as this allows it to tap on the growing outsourcing trend and demand for third-party logistics services in Japan.

Maintain Buy. MLT remains attractive at a forward yield of 5.3% and has one of the highest yields among S-REITs, offering a yield spread of about 50 bps and 225bps against S-REITs’ average forward yield and the Singapore long bond yields respectively. At current valuation, MLT offers a return of 22.8% (includes yield) and we have a raised target price of S$1.34 based on DCF Valuation. In our assumptions, we have imputed acquisitions of S$1bn p.a. from 2007 to 2009 in our valuation. Maintain Buy.

Extracts fm BT,

Mapletree Logistics Trust

Heavy sales by The Capital Group Companies in real estate investment trust Mapletree Logistics Trust, totalling 31 million units since February, reduced its deemed holdings to 26.8 million units, or 3.3 per cent. The disposals were made from Feb 10 to Oct 11 at around S$1.00 each.

Prior to the sales, the fund manager acquired nearly 7 million units from Feb 1 to 9 at around S$1.05 each and 11.7 million units via issuance of new units on Jan 27. Capital also picked up 12.1 million units from July to October 2005 at S$0.90 to S$1.12 each. Capital became a substantial shareholder in July 2005 following the purchase of one million units at 90 cents each, which raised its interest to 5.2 per cent. The stock closed at 95.5 cents on Friday.

Extracts fm OCBC Report dated 28-Apr-06,

Expect more acquisitions in 2H06

Summary: Mapletree Logistics Trust (MLT) reported its 1Q06 results with robust top and bottomline growth. Revenue was up 33% QoQ to S$13.4m with distributable income up 39% QoQ to S$8.3m. However, at the DPU level, growth was more muted at 6% QoQ to 1.11 cents due mainly to dilution from new units issued. This was below MLT's own forecast of 1.13 cents, and was attributed to a delay in the completion of its acquisition. Going forward, MLT's strategy continues to be aggressively buying assets here and abroad and it is targeting to achieve an asset size of S$5.0bn by 2010 or a 4.8x increase from its present size. We are more conservative and have allowed for a size of S$3.5bn. The key issue is whether MLT is overly aggressive buying on expectation of strong rental growth. In the immediate term, this is probably achievable as the region is in a recovery mode. However, the sustainability of this strategy for the longer term is less certain. Meanwhile, we maintain our BUY rating with a fair value of S$1.12.

Robust growth. Mapletree Logistics Trust (MLT) announced its 1Q06 results with revenue rising 33% QoQ to S$13.4m. Distributable income rose 39% QoQ to S$8.3m. DPU of 1.11 cents (+5.7% QoQ) is slightly below MLT's own forecast of 1.13 cents. The variance was due to some delay in completion of of acquisitions. It remains confident of achieving FY06 DPU of 4.58 cents. MLT bought 6 properties recently worth about S$253m. However, in terms of net property income (NPI) yield, these assets only provided an annualized NPI yield of 5.3%. This is well below what can be acquired in Singapore (at NPI yield of about 7%) and again indicates MLT's aggressive acquisition strategy based on expected future rental growth.

Expect asset size of over S$1.4bn year-end. Since its IPO in July 2005, MLT's original 15 properties of S$422m have ballooned to 28 properties worth S$715m. By 1H06, we expect the asset size to be at least S$1.04bn and growing to S$1.46bn by year-end. Assuming that MLT gears up to 45% of portfolio value, this implies that it can only raise a further S$455m in debt (vs. S$202m now). This is insufficient to finance the additional S$745m in acquisition by year-end. So we expect further equity raising by end 2006 .

Long term acquisition visibility unclear. MLT has a target asset size of S$5.0bn by 2010. Presently, the visibility of acquisition pipeline over the next 6-9 months is fairly visible. Beyond this, the availability of properties to be acquired is less clear. Hence we are less aggressive in our target asset size and have allowed for a portfolio size of S$3.5bn.

Maintain BUY and fair value. The latest results are broadly in-line with our expectation. Going forward, the focus will remain on MLT's execution strategy to achieve its acquisition target. MLT's strategy of buying on expected strong future rental reversion is perceived as aggressive. As have been demonstrated by market reaction to its acquisition of overseas properties at low NPI yield. In terms of ratings, we continue to see short to mid term positive newsflow from acquisitions and this should drive the unit price. Our target price remains at S$1.12, based on a target asset size of S$3.5bn. We reiterate our BUY rating.

Extracts fm Kim Eng Report dated 28-Apr-06, 

• 1Q06 DPU slightly below forecast - The group achieved 1Q06 distributable income of $8.3m on revenue of $13.4m. DPU of 1.11cts were marginally below its forecast of 1.13cts due to timing differences in completing the purchase of 6 properties in late Jan 06. On a qoq basis, bottomline rose 39% driven by acquisition growth and savings in property operating expenses.
  
• Robust acquisition pipeline - MLT has acquired 6 properties with 1.22msf of NLA in Q1 worth $253m. In addition, it has announced a further $329m of new deals in Singapore, China, Hong Kong and Malaysia, bringing total purchases to close to $600m to date. The group targets to expand its asset base by $1b this year to $1.4b or a 250% expansion in size since listing last year. In the pipeline are two warehouses at Lingang Free Port, 4.8ha bonded airport logistics centre at Tianjin Airport and a modular warehouse at the Vietnam Singapore Industrial Park. It has included South Korea in its geographical radar screen, which now comprise of Singapore (Tier 1), HK, China, Malaysia, Vietnam, Japan (Tier 2) and India, South Korea, Thailand (Tier 3).
  
• Sufficient debt capacity for future buys - The new purchases are likely to be funded by debt to maximise returns and we estimate gearing to reach 50-55% by year-end compared to 26% currently. It has obtained a Baa1 credit rating from Moody’s which would allow it greater flexibility to fund new acquisitions. In the longer run, it is looking at an optimal debt to asset ratio of 40-50%.
  
• Hold maintained with a price target of $1.15 - MLT offers exposure to the growing pan Asian logistics market. At the current price, the stock gives FY06 and FY07 yields of 4.6-5% based on its DPU forecast of 4.7cts and 5.1cts. Our DCF valuation of $1.15, based on an asset size of $2.4b by end 07, translates to a potential 10% upside from here.

Singapore Mapletree 1Q DPU 1.11 Singapore Cents

SINGAPORE (Dow Jones)--Mapletree Logistics Trust (M44U.SG) Thursday announced a distribution per unit of 1.11 Singapore cents for the first three months of 2006, higher than 1.05 cents in the last quarter of 2005.

The real estate investment trust, which owned 24 logistic properties in Singapore and Hong Kong as of March 31, reported a net property income of S$11.3 million for the three months and a distributable income of S$8.3 million.

(MORE TO FOLLOW) Dow Jones Newswires

April 27, 2006 05:26 ET

Singapore Mapletree 1Q DPU 1.11 Singapore Cents -2-

Mapletree's first quarter DPU was lower than its forecast of 1.13 cents. "This negative variance is due mainly to completions of acquisitions taking place later than assumed," the trust said.

But Mapletree, which listed on the Singapore Exchange at the end of July last year, said it's confident of meeting its forecast of 4.588 cents for 2006.

Mapletree's sponsor is Mapletree Investments Pte. Ltd., which is a wholly owned unit of Singapore's state-owned investment company Temasek Holdings Pte. Ltd. (TEMAH.YY).

Comment:Aiyo, did not manage to meet the forecast DPU. Does not look impressive.

Extracts fm OCBC Report dated 16-Mar-06,

The buying continues

More acquisitions. Mapletree Logistics Trust (MLT) recently announced more acquisitions post its equity fund raising (EFR) in January 2006. The latest two purchases are from Hong Kong and collectively costs S$33.1m. With these purchases MLT would have 28 properties (up from its IPO portfolio of 15 properties) with a total portfolio value of S$792m. Not much detail has been provided except that the acquisitions are accretive by about 0.0346 cents or 0.7% to our FY06 DPU forecast of 4.8 cents. However we estimate that based on 100% debt finance, the properties will generate a return of about 5.0% in its first year. Given Singapore industrial assets’ net property yield of just below 7%, MLT managers are probably anticipating rental or capital value growth from the Hong Kong acquisitions. We estimate that a 5% increase in both rental and capital value would boost the investment yield to a more acceptable return of about 10%.

Asset size almost doubled with more to come. Since its IPO in July 2005, MLT’s original 15 properties have ballooned to 28, increasing its asset size from S$422m to S$792m. However gearing remains manageable at 29%. More importantly with the recently obtained credit ratings, we see MLT could possibly raise its gearing to 45%. This means MLT has a lot of potential to raise debt for further acquisitions. In that respect, MLT had previously revealed that a further S$500m worth of acquisitions can be expected by 1H06. If fully debt financed, MLT’s debt could rise to over S$856m or to an unacceptable gearing of 66%. As such we expect further cash call in 2H06. Going forward MLT has a target portfolio size of S$5.0bn

Maintain BUY on acquisition prospects. The latest acquisition is broadly in-line with our expectation that MLT will continue to acquire to grow. We see MLT on target to achieve our target portfolio size of S$3.5bn in 2-3 years time. In terms of earnings accretion, as the proportion of increase from the latest acquisitions is relatively small (i.e. about 0.7%), we are maintaining our forecasts for now. We reiterate our BUY rating and fair value of S$1.12.

BT, January 19, 2006, 9.43 am (Singapore time)

Mapletree to raise S$130m in unit sale  

SINGAPORE - Mapletree Logistics Trust Management plans to raise $129.7 million (US$79.4 million) to finance acquisitions by selling new units to investors, the company said on Thursday.

Mapletree this week reported quarterly net income of $6 million as it prepares to expand its portfolio of warehouse and industrial park assets.

The trust had earlier said it planned acquisitions worth $500 million by the middle of this year that it will finance through bank loans. -- REUTERS

Extracts fm CIMB Report dated 18-Jan-06,

Growing Fast

• Above our expectations. For the period 28 Jul (listing) to 31 Dec 05, distribution per unit (DPU) was 1.84cts, outperforming our 1.68ct projection thanks to higher-than-expected revenue and lower-than-expected operating costs. Revenue benefited from contributions from three properties acquired in 4Q, while property maintenance expenses were lower. Gross revenue was S$17m and distributable net profit, S$10m. Historical comparatives are not available.
  
  
• Robust acquisition pipeline. MLT expects to acquire nine buildings (five in Singapore, one in Shanghai, three in Hong Kong) worth S$297m if unit holders approve an equity fundraising exercise for S$206m today. Its portfolio is now S$758m on a proforma basis, up 80% from the S$422m during listing. MLT is confident of acquiring another S$500m of logistics properties in 1H06, to be funded primarily by debt. Another S$1bn worth of assets are under various stages of negotiations.
  
  
• Optimising capital. MLT will be raising its gearing from 22.9% to 27% after the fundraising exercise and acquisitions. This figure may rise to 55% should it acquire the additional S$500m properties with debt (gearing will still be under the 60% cap). It is looking at a long-term gearing of 40-50%, benchmarked against its peers. It will be obtaining a credit rating by early February, and we understand that a triple-B rating, similar to that for US-based Prologis, is likely.
  
  
• Still offering strong growth prospects. With acquisitions coming faster than expected, we have raised our FY06-07 DPU forecasts slightly, and introduced our FY08 DPU forecast of 7.8cts. This brings MLT’s forward yields to attractive levels of 6.0-7.9%. We are optimistic that it will continue to grow exponentially via acquisitions, with good organic growth potential (average 4% p.a.) in its Hong Kong and China markets given the strong demand and lack of supply. We maintain our DDM-based target price of S$1.26, based on a weighted cost of equity of 7%, portfolio gearing of 40% and S$1bn worth of acquisitions by FY08. Maintain Outperform.

Extracts fm OCBC Report dated 6-Jan-06,

Remains one of the lowest yield REITs

Cash call to finance acquisitions. In a recent announcement, Mapletree Logistics Trust (MLT) indicated its intention to raise S$206m in equity to part finance the purchase of 3 properties in Hong Kong (HK) as well as to refinance 6 other recently acquired properties. Collectively the properties are worth S$301.5m and MLT intends to finance the balance from additional borrowings. Presently the pricing of the new units has not been finalised, however assuming S$0.95 per unit, we estimate an additional 216m new units could be issued. This will in turn increase the number of units in issue by 36%. If the transaction is approved by unit-holders, MLT asset base will increase to S$752m from its IPO size of S$422m.

Accretion expected but overseas yield too low. MLT has indicated that the HK properties are expected to provide a yield of 6.4%. We estimate that that as a result of this acquisition MLT's FY06 DPU will rise to 4.79 cents, or about 7.6% higher than our pre announcement DPU forecast of 4.45 cents. However the key issue is whether MLT should be investing in overseas assets at a lower return compared to what can be achieved domestically. Presently Singapore industrial properties can be acquired at a yield of about 7.0%. MLT's HK target properties on the other hand will provide a yield of only 6.4%. So taking into consideration the higher risk exposure for investing overseas, it seems illogical for MLT to acquire these assets. One explanation is that MLT expects rentals and capital value of these assets to rise. We estimate that a total return of about 8% p.a. could be achieved if rentals rise by about 10% and capital values rise by 3-5% over the next 12 months.

MLT remains one of the lowest yielding REITs. In light of new developments, we have revised FY06 DPU to 4.79 cents (from 4.45 cents). However based on current trading range, this provides a return of only 5.0%. Comparable REIT, i.e. A-REIT, gives a yield of about 6.3%. As for valuation we have a floor value of S$0.83 based on existing assets. But our target price remains at S$0.98 which is based on a portfolio size S$850m. Presently we see little upside to MLT and thus keep our HOLD rating.

Extracts fm DMG Report dated 22-Nov-05,

Shanghai property acquisition

Mapletree Logistics Trust (“MLT”) is acquiring Ouluo Logistics Centre (Ouluo) in Shanghai, for S$25.5m. This is MLT’s maiden regional acquisition. Maintain HOLD as valuation is not attractive.

(I) Acquisition of Ouluo Logistics Centre

• MLT has acquired Ouluo Logistics Centre for RMB120m (S$25.53m).
  
• The acquisition includes 7 blocks of warehouse/ distribution centres and 1 ancillary office block at Ouluo Logistics Centre, which is located at 785 and 909 Yuanhang Road, Jichang Town, Pudong New District, Shanghai.
  
• The property is located near the Pudong Airport where there is limited supply of logistics facilities and limited new supply in the near future. The property was completed in 2003/2004 and has a gross floor area of 33,246sm, on the 82,795sm plot of land.

(II) Comparing with other REITs

• At S$0.955, MapletreeLog is trading at 68% premium to its NAV. Its annualized yield is still lower than other REITs.

(III) Impact on MapletreeLog

• The new acquisition is expected to be accretive as it has an estimated initial property yield of 6.5% which is higher than MLT’s implied Net Property Income yield of 4.1% (based on unit price of S$1.03).
  
• The Civil Aviation Administration of China is projecting air transportation in China to expand 12% p.a. between 2006 and 2010. With the addition of this Shanghai property, MLT’s portfolio is further diversified and is able to benefit from the China’s air cargo business.
  
• The leasehold for the new portfolio of 19 properties after the acquisition of Ouluo Logistics Centre will be 58.9 years instead of 59.3 years previously.

(IV) Recommendation

• The acquisition is expected to be completed by Jan 2006. Though MapletreeLog’s leverage ratio is 27.4%, and can increase further in view of the new MAS ruling, there are concerns on the rising interest rates affecting the property yield.
  
• JTC announced that it will divest some of its industrial properties. We view this as injecting greater competition in the Singapore industrial market. The initial impact may be mildly negative for existing industrial landlords, depending on how the sale is executed.
  
• We maintain our HOLD recommendation for Mapletree Logistics at this point in time for its 4.3% annualized yield.