Mapletree Logistics Trust (MLT) has unveiled plans to acquire three Grade A warehouses in Malaysia and Vietnam for a combined total of RM558.8 million (S$157.9 million) and 1.3 trillion Vietnamese dong (S$68.4 million) respectively, the trust’s manager announced on Thursday (Feb 29).
The manager revealed that the agreed property value for the Malaysia-based logistics facility in Kuala Lumpur reflects a slight discount of approximately 0.2 per cent to the independent valuation conducted by HSBC Institutional Trust Services (Singapore), acting as MLT’s trustee. Additionally, considering the independent valuation conducted by the manager, the discount widens to 1.1 per cent, as stated by the manager.
Situated in Shah Alam, one of Malaysia’s major industrial areas highly favored by third-party logistics companies and end-users for domestic distribution and last-mile delivery, the warehouse is anticipated to yield an initial net property income (NPI) of around 5.7 per cent, according to the manager.
Meanwhile, the properties in Vietnam, located in Ho Chi Minh City and Hanoi, are expected to yield an initial NPI of approximately 7.5 per cent. The manager disclosed that the acquisition prices for these properties represent discounts of 3.2 per cent and 2.9 per cent to the valuations obtained by the trustee and manager respectively.
The warehouses in Vietnam are situated at Binh Duong province’s Mapletree Logistics Park 3 and Hung Yen province’s Hung Yen Logistics Park I, recognized as established hubs for industrial and logistics activities. These locations serve as strategic points for export distribution and e-commerce fulfillment center operations, particularly for deliveries to Hanoi.
The total acquisition cost, inclusive of acquisition-related expenses, is estimated to surpass S$234 million. The manager intends to finance these acquisitions through a combination of debt and a portion of the sales proceeds from recent divestments. MLT’s aggregate leverage is anticipated to increase from 38.8 per cent as of December 31, 2023, to 39.6 per cent on a pro forma basis following the financing of the acquisitions.
Ng Kiat, CEO of the manager, highlighted that these acquisitions follow divestments totaling over S$200 million year-to-date. He emphasized that the new properties, strategically positioned in key logistics hubs serving expanding consumer bases, position MLT’s portfolio to capitalize on the growth potential of emerging markets in Asia.
The manager underscored that modern, Grade A warehouses, such as those being acquired by MLT, constitute a minority of total warehouse supply in Malaysia and Vietnam, accounting for 39 per cent and 30 per cent of total warehouse supply by floor area respectively. The acquisitions are poised to meet the evolving demands of tenants while capturing the rent premiums commanded by modern warehouses.
Upon completion of the acquisitions, MLT’s exposure in Malaysia and Vietnam will increase from 24 assets to 27 assets, with gross floor areas in Malaysia and Vietnam expanding by 20.6 per cent and 21.0 per cent respectively.
Malaysia and Vietnam have emerged as significant beneficiaries of the structural changes in global supply chains, influenced by factors such as the US-China trade tensions, pandemic disruptions, and increasing pressures to deglobalize. MLT sees these acquisitions as strategic moves to leverage the competitive labor costs, skilled workforce, and supportive government policies in these countries.
MLT units closed up 0.7 per cent at S$1.48 on Thursday (Feb 29), prior to the announcement.
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