MAPLETREE Logistics Trust (MLT) is acquiring five freehold logistics properties in South Korea for 280 billion won (S$334.8 million) as it seeks to ride on growth opportunities in the logistics market.
Based on the purchase price, the properties will generate an initial net property income yield of about 4.5 per cent, MLT said in a filing to the Singapore Exchange on Monday night. The acquisitions are expected to be accretive to MLT’s distribution per unit (DPU).
With a total gross floor area of nearly 150,000 square metres (sq m), the properties have high quality building specifications – such as high floor-to-ceiling heights and large contiguous floor plates – which can meet the needs of third-party logistics firms (3PL) and e-commerce tenants.
Together with the specifications, the location of the properties will also help to attract tenants from high-value industries and the e-commerce sector, MLT highlighted. Situated in the Yongin-Icheon area, the properties are located in a prime logistics cluster in the south-east of the Seoul Metropolitan Area, and have a weighted average age (by net lettable area) of 4.2 years.
The properties are fully leased by four established local 3PLs with a weighted average lease expiry (WALE) of 1.7 years (by net lettable area). Tenants include Dongsan Logistics and TE Logis.
An independent valuation by Chestertons Korea Co put the market value for the properties at 290.7 billion won as at Jan 13, 2021. Hence, the purchase price works out to a discount of around 3.7 per cent to the properties’ valuation.
The latest transaction is part of MLT’s strategy to refresh its portfolio with modern, logistics facilities via acquisitions and redevelopment.
Ng Kiat, chief executive officer of MLT’s manager, said: “This is an attractive strategic opportunity for MLT to acquire a portfolio of high specifications warehouses that will significantly scale up our competitive positioning. The acquisitions will increase our gross floor area in South Korea by 40 per cent, enabling us to better cater to the current and future needs of our customers and capture growth opportunities in the logistics market.”
The acquisitions will be funded by debt. Including acquisition related expenses, the total cost of the transaction is estimated at 298.2 billion won.
Post acquisition, MLT’s aggregate leverate ratio will stand at around 38.9 per cent, while its portfolio will grow to 161 properties with assets under management totalling S$10.5 billion. Aside from South Korea, MLT also has properties in Singapore, Hong Kong, Japan, Australia, China, Malaysia and Vietnam.
Shares in MLT closed at S$1.95 on Monday, up two Singapore cents or 1.036 per cent.