REIT Financial News - 31 MAY 2010: MapletreeLog acquires 3 properties for S$83.5 million in Vietnam, Japan and Singapore

MapletreeLog acquires 3 properties for S$83.5 million in Vietnam, Japan and Singapore:

• Press Release 
• Presentation Slides

Key Points

• the Reit has acquired three properties for $83.5 million. The properties are:
• a warehouse in Vietnam (Mapletree Logistics Centre) by way of conditional Sale and Purchase Agreement with the sponsor for US$6.4 million ($8.8 million).
• a warehouse Japan (Sendai Centre) by way of conditional Sale and Purchase Agreement with the sponsor for JPY 1.49 billion ($21.7 million).
• a distribution centre in Singapore (Natural Cool Lifestyle Hub) by way of a Put and Call option agreement with Natural Cool Investments (a wholly-owned subsidiary of Natural Cool Holdings) for $53 million.
• The Net Property Income (NPI) yield of Sendai Centre in Japan is 6.8% which is higher than the implied property yield of MapletreeLog’s existing Japan portfolio of 5.0%. 
• The NPI yield of Natural Cool Lifestyle Hub in Singapore is 8.05% which is also higher than the implied property yield of 7.1% of MapletreeLog’s existing Singapore portfolio. 
• The NPI yield of Mapletree Logistics Centre in Vietnam is 10.3% and will be the Reit's first Vietnam asset in the portfolio.
• Collectively, the acquisitions have a weighted average NPI yield of about 7.9% which is higher than MapletreeLog’s existing portfolio of 6.2%.
• the Reit intends to fund the acquisitions fully by debt in the interim, and gearing is expected to go up to 40.2%.
• The accretion to DPU is expected to be 0.157 cents or 2.62% based on 1Q 2010 financial results.

Author's Note
Prior to the 2008 financial crisis, MapletreeLog has been very aggressive in its acquisitions, and its gearing was once above 50%, close to the gearing limit of 60%. It has raised funds via equity twice, once in 2008 via rights issue, and a more recent one around Nov 2009 via private placement. These have brought the gearing down to the 30% level. The gearing as at 31 Mar 2010 was 38.6%. With this latest and the other recent acquisitions, the gearing has once again crept up to the 40% level.