Mapletree Logistics Trust (MLT) has announced an asset recycling exercise. It has entered into a sales and purchase agreement to acquire 190A Pandan Loop in Singapore for a purchase consideration of S$34.0m. It has also signed an MOU for the divestment of 134 Joo Seng Road in Singapore for a sale consideration of S$13.5m.

The acquisition property is expected to provide MLT with a stabilised NPI yield of 6.5%, which is slightly higher than its overall portfolio NPI yield of 6.3% for FY14. The transactions are expected to be completed in Nov 2014 and 1QCY15, respectively.

190A Pandan Loop is a four-storey purpose built food distribution centre with chiller and freezer facilities and is located within a JTC Food Zone in the Pandan Loop industrial estate. It has an underutilised plot ratio with the potential to double its GFA and also a remaining land lease tenure of 40 years

Funding will come from debt and proceeds from its divestment. We estimate the two deals would provide a marginal uplift of 0.1% and 0.2% to our FY15 and FY16 DPU forecasts, respectively. Maintain HOLD and S$1.12 fair value on MLT.

Source: OCBC Research - 10 Nov 2014