Mapletree Logistics Trust (MLT) recently announced that it has completed the divestment of its 20 Old Toh Tuck Road property at a sale consideration of S$14.25m. This was transacted at an attractive price, in our view, as it was higher than the purchase price of S$11.6m and last valuation of S$13.0m (as at 31 Mar 2016). In addition, the property is already 18 years old and has been vacant since Mar 2016 following the expiry of a master lease, thus making sense for MLT to divest it.

Looking ahead, management has signalled to the market that it will continue to explore opportunities to recycle its capital. This would involve divesting its older properties with less modern specifications and/or lower yields and redeploying capital into new investments, including deepening its presence in Australia.

At current price level, MLT is trading at FY17F and FY18F distribution yields of 6.8% and 7.0%, respectively, which we believe is fair. Maintain HOLD and S$1.06 fair value estimate on MLT.

Source: OCBC Research - 24 Mar 2017