Singapore-listed industrial REIT Mapletree Logistics Trust (SGX:M44U) has entered into an agreement with Japanese logistics company, Nippon Express, for an asset enhancement initiative (AEI) on the property at Moriya Centre in Ibaraki, Japan.
The planned AEI, which is being undertaken to cater for the business growth of Nippon Express, will cost Mapletree Logistics Trust some JPY1,409 million (SGD16.2 million), the REIT said in a statement released 31 March.
“We are delighted to support the expansion needs of Nippon Express, one of MLT’s top 10 customers, at our own property. Moreover, this AEI will unlock unutilised plot ratio by generating an additional 26% in gross floor area, thereby enhancing the yield and value of the asset”, said Ng Kiat, CEO of Mapletree Logistics Trust’s manager.
Moriya Centre currently comprises two blocks of warehouses, both of which are leased to Nippon Express. The company is seeking to expand the premises to support its growing document storage business.
The impending AEI will add a new four-storey dry warehouse with approximately 9,000 sqm of gross floor area (GFA), bringing total GFA of the asset to approximately 43,700 sqm. The new warehouse will feature a floor loading capacity of 2.0 ton/sqm, above the standard 1.5 ton/sqm, to allow for higher stacking and more storage.
The AEI works are scheduled to commence in April 2015 and complete by March 2016. Upon completion, Nippon Express will lease the new warehouse space with an annual rental escalation till December 2021.
The AEI will be funded by debt. Following the completion of this AEI, Mapletree Logistics Trust’s aggregate leverage ratio will increase to approximately 35.0%. Units of the REIT are currently listed on the Singapore Exchange at SGD1.58.