Mapletree Logistics Trust may inch up on yield-accretive acqn of 2nd property in South Korea for $32m, comprising 2 blocks of warehouses with total GFA of 309k sf & offering initial 9% net property yield vs 7.2% for MLT's existing portfolio. The property is located in a well established logistics cluster where 70% of S Korea's warehouses, distribution centers are situated. MLT will lease property back to vendor Multi-Q Logistics for 5 yrs with annual rental escalation.
Purchase expected to be completed by Sep, will bring MPT's gearing to 44.2%, assuming fully debt funded. This is MPT’s 7th acqn since Dec 09, bringing total puch cost to $460m DB, which has Buy call with $0.95 target price, estimates minor 0.5% boost to FY11-12 DPU, expects MLT to undertake equity fund raising for future acqns as gearing near 45% optimial level. Reit is well diversified with properties spanning SG (47%)< Japan (23%), HK (17%), China (6%).
Valuations attractive at 7.4% FY11 DPU yield & 1x P/B.
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