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Mapletree Log: Acquires properties in Japan.

Wednesday, July 28, 2010

Mapletree Logistics Trust (a Temasek linked REIT), has shown its confidence in the Japanese economy by acquiring three distribution centres in Japan for a total of JPY13b or S$200m.

"MapletreeLog says it has sufficient financial flexibility and capacity to fund the Acquisition which is expected to be completed by end 3Q 2010. The purchase price and other acquisition costs of the properties will be fully funded by debt, which will bring MapletreeLog’s gearing level to 43.6%, after taking into account all acquisitions announced to date." (The Edge, 28 July 10, 13.23)

Its presentation slides show these acquisitions to be yield accretive. The investment would generate a return of 7.3% per annum.  At the last traded price of 88c, the yield is currently about 6.8%. These Japanese properties are likely to bump up DPU by 5.6% per annum. The properties are also freehold in nature.  No "depreciation". See presentation slides here.

Having said this, with these latest acquisitions, gearing level would be pushed up to 43.6%.  One wonders if Mapletree Log would go to unitholders with hat in hand in the near future or, perhaps, do a share placement.


 

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