Blue chip logistics REIT Mapletree Logistics Trust (SGX:M44U) held its extraordinary general meeting (EGM) yesterday afternoon to seek unitholders’ approval on the proposed acquisition of 22 properties in China, along with 1 property in Malaysia as well as in Vietnam. Approval was also sought for its proposed issue of new units of the REIT as partial consideration for its China acquisitions, and also for the proposed whitewash resolution.
Due to the safe distancing measures imposed by the Singapore government (due to the ongoing Covid-19 pandemic), the EGM was held in a hybrid mode – both online as well as offline (limited spaces available.) I have opted to attend the online version of the meeting as a unitholder and in this post, you’ll find a key summary of it, which I’ve compiled for the benefit of those who weren’t able to attend…
Presentation by Chief Executive Officer, Ms Ng Kiat
- The following are details of the acquisition:
- Acquisition of the remaining 50.0% stake in 15 warehouses in China, a 100.0% stake in 7 warehouses in China, 1 warehouse in Malaysia and also in Vietnam
- Aggregate Agreed Property Value: S$1,509.2 million
- Implied Net Property Income yield: ~5.2%
- Net Lettable Area: 1,223,660 sqm
- Committed occupancy rate: 94.7%
- Weighted average lease expiry: 2.3 years
- CEO of Mapletree Logistics Trust, Ms Ng Kiat, shared that the logistics industry have benefited from the ongoing Covid-19 pandemic, where demand for Grade A warehouse space have increased as a result of an increase in adoption of e-commerce.
- She explained that 3 geographical locations which the REIT will be acquiring properties in (China, Malaysia, and Vietnam) have seen their GDPs staying resilient despite the pandemic. Also, these countries are also projected to see a strong growth in their urban population in the years ahead (which will lead to an increase in demand for modern logistics space.) Coupled with the limited supply of Grade A warehouse space in the 3 countries, Ms Ng added that represents an opportunity for the REIT, being a leading provider of quality logistics space in Asia-Pacific, to come in and fill the market gap.
- On top of that, Ms Ng also shared that the warehouses’ locations are strategically located near local consumption hubs in under an hour, which is an important consideration for tenants in e-commerce businesses. Not just that, post-acquisition, the REIT will see new top 10 tenants (by percentage of gross revenue) in JD.com (which will contribute 2.4%) and Cainiao (which will contribute 2.1%.)
Presentation by Chief Financial Officer, Ms Charmaine Lum
- Ms Lum shared that the proposed acquisitions are at a discount to the independent valuations:
- for the China properties, they are acquired at a 1.9% discount to the valuation by independent valuers appointed by the Trustee, and at a 0.9% discount to the valuation by independent valuers appointed by the Manager
- for the Malaysia property, it is acquired at a 0.6% discount to the valuation by independent valuers appointed by the Trustee, and at a 1.6% discount to the valuation by independent valuers appointed by the Manager
- for the Vietnam property, it is acquired at a 0.8% discount to the valuation by independent valuers appointed by the Trustee, and at a 1.0% discount to the valuation by independent valuers appointed by the Manager
- In terms of how the acquisitions will be funded, Ms Lum explained that it will be through a combination of proceeds from the Equity Fund Raising (comprising of a private placement of new units to institutional and other investors at a issue price of S$2.027 per new unit to raise gross proceeds of approximately S$500.0m, and a preferential offering of new units to existing unitholders at a offering ratio of 19 preferential offering units for every 1,000 existing units to raise gross proceeds of approximately S$144.1m), Consideration Units (amounting to S$300.0m, based on an issue price of S$2.027 per consideration unit), as well as Loan Facilities (amounting to S$80.7m.)
- She added that acquisitions are not only DPU- and NAV-accretive (on a pro-forma basis, the former will increase by 1.7% from 8.142 cents/unit to 8.280 cents/unit, while the latter will go up by 7.2% from S$1.21 to S$1.29), but post-acquisition, its pro-forma aggregative leverage will be reduced as well (from 39.5% pre-acquisition to 36.8% post-acquisition.)
- While the REIT’s overall WALE will be reduced to 3.8 years post-acquisition (from 4.2 years pre-acquisition), but Ms Lum explained that it is in-line with the properties’ WALE in the respective markets.
Questions and Answers
The following are some of the questions raised by unitholders (who attended the meeting physically as well as virtually), along with responses from the REIT’s management:
- A unitholder was concerned about the drop in the REIT’s portfolio WALE post-acquisition. To which, Ms Ng shared that the 3 countries which the REIT will be acquiring properties in have relatively shorter WALEs in general, hence explaining the decline post-acquisition.
- Another unitholder asked if the REIT will further expand into new geographical markets in the future, to which the Chairman, Mr Lee Chong Kwee, responded that they are open to it should an opportunity to do so arises.
- Given a spate of mergers and acquisitions among REITs recently, a unitholder asked if there is any possibility for Mapletree Logistics Trust to merge with other REITs. In response, Mr Lee said that he see no reason why an amalgamation should occur, as the logistics market is big enough for the REIT to continue to remain focused on it.
- Finally, another unitholder asked if the REIT have considered developing the logistics properties themselves, instead of through acquisitions. To that, Mr Lee responded that the REIT will definitely consider if an attractive opportunity to do so (in terms of cheap land, along with ready tenants for the property) comes along.
Results of EGM Resolutions
- Resolution #1, which seeks unitholders’ approval on the proposed acquisitions of the remaining 50.0% interest in 15 properties and a 100.0% interest in 7 properties in China, along with the proposed acquisition of a property each in Malaysia and Vietnam, received a total of 99.99% votes for, and 0.01% votes against
- Resolution #2, which is on the proposed issue of new units of the REIT as partial consideration for the acquisition of China properties, also received a total of 99.99% of the votes for, and 0.01% of the votes against
- Resolution #3, which is on the proposed whitewash resolution, received a total of 93.76% of the votes for, and 6.24% of the votes against
Disclaimer: At the time of writing, I am a unitholder of Mapletree Logistics Trust.
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