Mapletree Logistics Trust will acquire the Mapletree Logistics Hub located at Port Tanjung Pelepas, Johor Darul Takzim in Malaysia via an asset-backed securitisation (ABS) deal after efforts to acquire the property previously had lapsed due to pandemic-related difficulties getting approval from the Johor Port Authority, the trust said in a filing to SGX Friday.
Under the deal, Semangkuk 2 Bhd., which is a bankruptcy-remote special purpose vehicle incorporated in Malaysia, will acquire the Malaysia property from Trinity Bliss, which is a company indirectly owned by Mapletree Investments and Itochu Corp. on an 80:20 basis, respectively, the filing said.
Semangkuk 2 will pay 404.8 million ringgit, or around S$130.2 million, in cash to the seller, Trinity Bliss, the filing said.
Then, Semangkuk 2 will issue either bridge medium-term notes with an early redemption option to bridge finance the acquisition — which are expected to be refinanced with the issuance of multiple tranches of medium-term notes — or it will issue junior-ranking ABS medium-term notes along with senior-ranking ones, the filing said.
Issuing medium-term notes
The bridge medium-term notes, which will essentially be the full acquisition price, will be fully subscribed by Mapletree Logistics Trust, until the senior and junior ABS medium-term notes are issued to refinance the bridge financing, the filing said.
The senior ABS notes will be issued to sophisticated investors, while the junior notes will be fully taken up by Mapletree Logistics Trust, with the quantum of the split to be decided based on market conditions and demand, the filing said. The senior notes will be denominated in ringgit.
Mapletree Logistics Trust said the structure of the deal means it is investing indirectly in the underlying real estate held by Semangkuk 2 and will be receiving cash flow from the property in the form of interest income from the notes.
Financing the deal
The trust said it will finance the deal with a combination of proceeds from equity fundraising, drawing down debt facilities and issuing the senior ABS notes. Last year, the trust raised around S$644.1 million via an offering of new units to existing unitholders and a private placement; around S$50.9 million of the proceeds will partially finance the Malaysia property acquisition, the filing said.
Mapletree Logistics Trust said acquiring the property, a grade-A warehouse in a regional distribution hub, will strengthen its network and competitive position as it will be able to offer its customers leasing options across multiple cities to meet their expansion plans.
The Port of Tanjung Pelepas is Southeast Asia’s third-largest container port, after Singapore and Port Klang, and offers a strong competitive cost advantage over Singapore’s port, with lower tariffs for transshipment cargo and lower warehouse rents, the filing said.
“Given a limited supply of grade-A warehouse space in Malaysia and a growing demand for such facilities driven by supply chain modernisation and e-commerce, the Malaysia acquisition will position MLT well to fill the market gap,” the trust said.
The property, which had a 95 percent committed occupancy rate as of end-June, is expected to have an initial net property income yield of around 5.4 percent and is expected to be accretive to Mapletree Logistics Trust’s unitholders, the filing said.
The agreed value of the Malaysia property of 404.8 million ringgit is a discount of around 0.05 percent to Knight Frank’s aggregate valuation of 405 million ringgit and an around 1.27 percent discount to First Pacific’s valuation of 410 million ringgit, the filing said.