MLT

MLT: signed an MOU with sponsor Mapletree Invmts to acq Mapletree Wuxi Logistics Park (MWLP) in China for Rmb 116m ($22.8m). This compares with the avg of two independent valuations at Rmb 119m. This will be the third property to be acq from its Sponsor’s devt pipeline and is inline with MLT’s strategy to expand its presence in China. The acq will be debt funded with completion expected by Mar ’13. MLT’s leverage will rise marginally to 37.3%. NPI yield of ~8% is higher than the implied property yield of 6% for MLT’s existing China portfolio. Deutsche estimates ~0.6% accretion to FY14e DPU. Post-acquisition, China will account for 5.3% of its portfolio by gross revenue. Completed end ’08, MWLP is a high quality logistics development with GFA of ~45k sm comprising three blocks of single-storey warehouse with mezzanine office. It is located in Wuxi New District, close to Wuxi Sunan Shaofang International Airport and is well served by highways and railways. It is currently fully leased to a strong tenant base of local and international companies including Wuxi Hi-tech, Kerry Logistics, Fiege International Freight Forwarder and Konoike Logistics. Lease terms of 2-3 years will enable MLT to benefit from positive rent reversions in the future. Mgt had previously articulated its slight change in focus towards pursuing acquisitions in higher growth markets such as China and Korea and newer markets (eg. Indonesia & Australia) and this latest acquisition brings it a step closer towards this objective. Deutsche continues to like MLT’s stable distributions, growing geographical footprint and well-diversified portfolio with potential boost from the acquisition of its Sponsor’s $400m development pipeline. Keep Buy with TP $1.24, notes FY13e and FY14e yields of 6.3% and 6.4% appear attractive.