Tuesday, November 23, 2021

Mapletree Logistics Trust Shopping Spree!

After the previous preferential offering by Mapletree Logistics Trust (SGX:M44U) in Nov 2020, it is time for another round of equity fund raising.

Actually, I have been quietly anticipating for any of the Mapletree Reits to announce acquisitions and equity fund raising throughout the months and it has finally arrived. I like preferential offerings because it is a seamless and fuss-free way to add shares to increase investments in high quality income-producing Reit without incurring commissions and trading fees. Usually when such acquisition news are released, the price of the Reit will take a beating and undergo some weakness for a period of time, presenting opportunity to also add shares from the market.

On 23 Nov 2021 today, MLT has announced a proposed acquisition of 17 grade-A logistics properties in China (13), Vietnam (3) and Japan (1) for $1.4 billion. The 13 China properties will be acquired for 1.15 billion yuan (S$243.6 million) in cash, while the remaining amount will be inter-company loans worth 1.77 billion yuan that MLT will pay through cash and new units, as well as 1.24 billion in bank loans. The Vietnam properties will be paid US$14.4 million in cash with the rest via inter-company loans. The Japanese property will be paid fully in cash at 1.7% discount to the independent valuation.

An equity fund raising will raise around $700 million. The fund raising comprises of a private placement of between 209.3 million and 215.1 million new units at an issue price of between S$1.86 and S$1.91 per new unit to raise around S$400 million. A non-renounceable preferential offering of up to 163.4 million new units to existing unit holders at between S$1.82 and S$1.87 per new unit will raise about S$300 million.

What is my take?

As of time of writing, details on the preferential offering for existing unitholders are not released yet.

There is an advanced payment of between S$0.0145 and $0.0147 on 12 Jan 2023 in lieu of the enlarged unitholdings after the private placement exercise, which will be a test bed for the institutional investors on the popularity of this equity fund raising to determine the exact unit price for the non-renounceable preferential offering.

I will participate in this equity fund raising of preferential offering as I believe in the riding on the waves of booming e-commerce underpinned by Asian thriving logistics hubs of China and Vietnam for the long-term. Mapletree Logistics Trust has a great track record of rewarding unit holders with consistent, increasing income through aggressive expansion of its footprint in the Asian logistics markets. This time will be no different.

Thanks for reading, As always, stay safe and remain strong.

With love & peace, 

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