REIT Financial News - Mapletree to Form Joint Venture With ITOCHU to Develop Build-To-Suit Logistics Properties in Japan

The sponsor of Mapletree Logistics Trust, Mapletree Investments Pte Ltd, has announced on Dec 06 that it has signed a Memorandum of Understanding (“MOU”) to enter into a joint venture with Japan’s ITOCHU Corporation (“ITOCHU”) to undertake primarily Build-to-Suit development projects for strong logistics tenants in Japan. See full report. 


Key Points:
- The partnership aims to develop US$300 million to US$500 million worth of logistics properties over the next 24 months in Japan. 

- The two companies also cemented their strategic alliance by extending for a further two years through another MOU to collaborate on investment and development of logistics, retail, industrial and commercial real estate projects in Japan, Singapore and the rest of Asia. 

- Itochu is also now an investor in the Mapletree Industrial Trust, which holds the $1.7 billion industrial assets privatised by JTC Corporation.

- The completed assets will be offered to Mapletree's logistics real estate investment trust, Mapletree Logistics Trust, on a right of first refusal basis.


Author's Note: 
Mapletree Logistics Trust was rather agressive in its expansion up to 2008 period, with gearing hitting a high of over 50%. The gearing was brought down to the 30++% level after a rights issue in August 2008. Its gearing currently stands around 38%.It has recently done a private placement to fund acquisitions, but this has left the gearing almost unchanged. Have expected it to go on the path of rights issue like the other REITs to bring down its gearing. Current total debt stands at around S$1,175 million. If it were to be acquire these US$300 million to US$500 million worth of logistics properties in Japan over the next 24 months, it will definitely need more significant funding by debt, by equity, or a combination of both.