Amid the challenging operating environment, Mapletree Logistics Trust (SGX: M44U) bucked the trend and embarked on yet another round of asset acquisitions, acquiring new logistics assets in Japan, Australia, South Korea and China. Total cost of acquisitions came up to about $1.122 billion.
For a moment, my heart sunk upon seeing the announcement as the thought of another mega rights issue would be on the way crossed my mind. Thankfully, it turned out that the management has opted for a combination of private placement ($200 million) and bank loans ($746.8 million).
The private placement will see placement of between 121,285,000 and 124,223,000 new units at an issue price of between $1.610 and $1.649 per new unit. In connection to the private placement, a distributable income of 2.502 cents per unit will be paid to unitholders for the period from 1 January 2023 to the day immediately prior to the date on which the new units would be issued.
Year-to-date, Mapletree Logistics Trust (SGX: M44U) unit price increased by about 9.5%. The counter was featured in the February SGX Top Ten Institutional Net Buy Stocks, with net buying value of $14.3 million. Looking back, the past one year had been torrid for most S-REITs due to the relentless interest rate hikes by US Federal Reserves. Like the rest of its peers, Mapletree Logistics Trust (SGX: M44U) is heavily leveraged. As such, the increase in interest rates would increase interest expenses and also caused currency volatility. After the completion of the latest acquisitions, the leverage for Mapletree Logistics Trust (SGX: M44U) will be nearly 40%.
I invested in Mapletree Logistics Trust (SGX: M44U) in November 2021, having bought 16,000 shares when the unit price was trading at $1.96. So far, I had collected distributions of $1,791.36, representing yield of 5.7%. Even though my unrealized loss amounted to $3,400 (due to the decrease in unit price), I intend to hold the units for the long-term as I had bought them using my Supplementary Retirement Sum (SRS) account. This means that my intent of holding the shares is for dividend collection.
After factoring the recent distributable income and the upcoming 4th quarter distribution, my total distributions collected will be $2,543.36. Given the distribution track record of Mapletree Logistics Trust (SGX: M44U) and the management’s performance in growing the S-REIT through the pandemic, I am looking into upping my stake in Mapletree Logistics Trust in the coming month. In this article, I will take a deep dive into the outlook of this S-REIT in FY2023.Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. I am vested in this counter, so my views on Mapletree Logistics Trust unit price may be biased.
Mapletree Logistics Trust (SGX: M44U) to rebound with China?
In my previous article, one of my biggest concerns about Mapletree Logistics Trust was that the S-REIT could mount a rights issue for its pipeline of projects in China, thereby diluting the unit price. Now that the financing for the latest acquisitions has been confirmed to be private placement combined with bank loans, that uncertainty has been addressed.
The latest acquisitions not only increase Mapletree Logistics Trust’s logistics assets in China, but also [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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