Mapletree Logistics: No compelling reason to merge with Mapletree Industrial

Mapletree Logistics Hub Tsing Yi in Hong Kong. Credit: Mapletree Logistics TrustMapletree Logistics Hub Tsing Yi in Hong Kong. Credit: Mapletree Logistics Trust

Mapletree Logistics Trust said Monday it has no plans to merge with Mapletree Industrial Trust, saying there was “no compelling reason” for a deal.

“We believe that there is sufficient differentiation between MLT and MIT in terms of asset type, geography and tenant profile, and they are both operating at a meaningful scale individually with promising growth prospects in their respective sectors,” Mapletree Logistics Trust said in answers to questions from shareholders ahead of an extraordinary general meeting (EGM) this week.

The shareholder question followed Mapletree Commercial Trust and Mapletree North Asia Commercial Trust announcing at end-December a plan to merge into Mapletree Pan-Asia Commercial Trust in a S$4.22 billion deal, creating one of Asia’s top-10 largest REITs with assets across Singapore, South Korea, China, Hong Kong and Japan.

Mapletree Logistics Trust is holding an EGM on 13 January for shareholders to approve the acquisition of 16 properties, including 13 in China and three in Vietnam, and the issuance of new shares to partially finance the deals.

In response to a shareholder question about acquiring assets in China amid the government’s regulatory crackdown, Mapletree Logistics said the clampdown appeared focusing on sectors such as technology, gaming, education and property, and appeared prompted by efforts to curb monopolistic market activity, improving data security and ensuring “common prosperity.”

“The manager believes that the logistics sector has not been disadvantaged by the government’s regulatory tightening actions and that infrastructure and logistics hubs development have always been top priorities on the national agenda. They often receive strong government support as they help promote economic growth and urbanisation, especially for the less developed areas,” Mapletree Logistics said.

The trust added that the China acquisitions will expand its presence on the mainland to capitalize on favorable market trends and to capture growth opportunities.

A shareholder also expressed concerns about China’s zero-Covid strategy and how it might affect growth.

Mapletree Logistics pointed to the properties’ Grade A specifications were a benefit in a market with a relatively limited supply of Grade A facilities.

“We believe the long-term fundamentals of the Chinese logistics sector remain compelling, driven by urbanisation and domestic consumption growth, including e-commerce, which underpins the strong demand for Grade A logistics facilities,” the trust said. “In addition, higher e-commerce adoption and a greater emphasis on supply chain resiliency due to the pandemic have led to stronger demand for modern logistics facilities.”

 

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