9 Changi South Street 2. (Google Maps)

Mapletree Logistics Trust (MLT) has been granted an option to acquire 9 Changi South Street 2, which was formerly in service as a warehouse for homegrown retailer Robinsons.

The asset will be acquired from RSH Holdings Pte Ltd for a purchase price of SGD24.5 million, just marginally below the independently-obtained valuation of SGD24.6 million.

The proposed acquisition is expected to generate a stabilised property income yield of approximately 6.2% based on the purchase price and initial land premium, and it is also expected to be accretive to MLT’s distribution, said the REIT.

The transaction is subject to, among others, approval from JTC Corporation, and exercise of the option to purchase by MLT.

“With a limited supply of logistics properties in the eastern part of Singapore, 9 Changi South Street 2 is an attractive property given its prime location and a relatively long remaining land tenure of over 33 years, said Ng Kiat, CEO of the REIT’s manager.

“The property is also adjacent to our existing property at 15 Changi South Street 2, thus presenting the opportunity for potential economies of scale”, she added.

The property will be sold with vacant possession and MLT’s manager is in talks with an international 3PL to lease the property as the anchor tenant.

The acquisition will be funded by debt and is expected to be completed by 3Q FY21/22.

Upon completion, MLT’s aggregate leverage ratio will be approximately 38.5%, while MLT’s total portfolio will comprise 164 properties with total assets under management of SGD10.8 billion.

MLT’s announcement on the proposed acquisition can be viewed here.

MLT was last done on the Singapore Exchange (SGX) at SGD2.10, which currently implies a distribution yield of 3.96% according to data compiled on the Singapore REITs table.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.