The acquisition is expected to be accretive to MLT's DPU.
The manager of Mapletree Logistics Trust (MLT) has proposed to acquire Baeksa Logistics Centre in South Korea for a consideration of 88.5 billion won ($100.3 million).
“This acquisition, with its modern specifications and 100% occupancy underpinned by a leading e-commerce company, is expected to be yield-accretive to MLT,” says Ng Kiat, CEO of the manager.
The property was independently valued by Chestertons Research Co., Ltd. at KRW91.5 billion as at Dec 21, 2021.
According to the REIT, the acquisition is estimated to generate a net property income (NPI) yield of 4.0% based on the property purchase price, and is expected to be accretive to MLT’s distribution per unit.
The property will raise MLT’s e-commerce revenue exposure in South Korea to 36% from 31% previously.
It will also expand the REIT’s presence in a key logistics market that serves the Seoul Metropolitan Area thanks to the centre’s location in northeast Incheon, within the established Yongin-Icheon logstics hub.
According to MLT, northeast Icheon has become the choice location for logistics development in recent years following the completion of the National Road #3 expressway in 2017. The expressway offers toll-free and faster connections to Gangnam in southern Seoul, as well as eastern Seoul, compared to other expressways.
The acquisition will also position MLT to ride on the growing demand from the e-commerce industry.
According to the REIT, South Korea’s e-commerce market ranks amongst the most developed in the world and has seen steady growth through the years.
The property is also in a favourable position to ride on positive trends from the e-commerce sector.
Baeksa Logistics Centre is a four-storey single block dry logistics facility that has a total gross floor area (GFA) of 41,100 sqm sited on 30,000 sqm of freehold land. It was newly completed in December 2021.
The property is built to high-quality building specifications, including strong floor loading of over 20 KiloNewton per sqm, high floor-to-ceiling height of 9 to 10 metres and a full sprinkler system. The property also provides direct ramp access and spacious docking yards that facilitate efficient and high flow logistics operations,” says MLT in its statement on Feb 28.
The property is 100% leased to leading e-commerce company Howser, which has a partnership with Coupang to deliver furniture sold on its platform.
The acquisition will be fully funded by debt and is expected to be completed by the 1QFY2022/2023.
Upon completion, MLT’s aggregate gearing ratio will be approximately 39.6% on a pro forma basis.
Units in MLT closed 1 cent higher or 0.58% up at $1.75 on Feb 28.