Mapletree Logistics Trust could embark on $500m acquisition spree by FY2020

Possible acquisitions could come from China or Vietnam.

Mapletree Logistics Trust (MLT) is expected to seal $500m in new acquisitions in FY 2020 thanks to an active pipeline from its sponsor and a myriad of opportunities from third parties, a report by DBS Equity Research revealed.

In July, it was reported that global private equity firm Blackstone acquired a Tokyo warehouse portfolio from MLT’s sponsor for approximately $1.26b (JPY100b). The asset was initially part of the sponsor’s pipeline available for MLT.

“However, we understand that such a deal may not have been accretive for MLT,” CGS-CIMB’s analysts Lock Mun Yee and Ervin Seow noted. “MLT continues to have a pipeline of approximately five million sqm of logistics assets from its sponsor, and we think that any possible acquisition could come from China or Vietnam.”

Following the successful acquisition of a 50% interest in 11 properties in China and a portfolio of five ramp-up properties in Singapore, as well as the divestments of selected older-specification properties, MLT saw a slight dip in occupancy rates to 97.6% in Q1 FY 2019/2020. “We saw a drop in occupancy rates in Singapore due to the expiry of a single-user asset (SUA) for which the manager looks to backfill in the subsequent quarters,” DBS’ analysts said.

Hong Kong and South Korea also saw a QoQ dip in occupancy, down to 97.6% and 98.5% from 98.8% and 99.1%, respectively.

A separate report by OCBC Investment Research (OIR) also noted that with the uncertain macroeconomic environment, MLT explained that customers have become more cautious on renewals and capacity expansion. “However, overall leasing demand for warehouse space has been resilient to-date,” OIR’s analysts said.

The REIT also reported a strong rental reversion of 1.8% during the quarter, mainly from Hong Kong, Vietnam and China.

In Q1, MLT’s net property income (NPI) jumped 18.2% YoY to $106.1m from $89.8m, whilst revenue rose 13.6% YoY to $119.81m from $105.44m, thanks to income growth from its completed redevelopment of Mapletree Ouluo Logistics Park Phase 1, and regional acquisitions in the last fiscal year.

Also read: Mapletree Logistics Trust NPI climbed 18.2% to $106.1m in Q1

“Contributions from these more than offset the income vacuum left by asset divestments in Q1 FY 2020, two in FY 2019, as well as the impact of the weaker AUD, RMB and Korean Won against the SGD,” DBS’ analysts said. They added that MLT saw higher take-rates of 96.4% in China during the quarter from the backfilling of JD.com space.