Mapletree Logistics Trust (MapleLog) is looking to tap on Hong Kong’s recent spate of high growth by adding a property in the SAR

Mapletree Logistics Trust (MapleLog) is looking to tap on Hong Kong’s recent spate of high growth by adding a property in the Special Administrative Region to its portfolio.

It will buy five floors of a 19-storey warehousecum-industrial building - the Tai Sang Shatin Warehouse Centre in Shatin, New Territories, Hong Kong - for HK$66 million (S$12.8 million).

Explaining the rationale for the deal, Chua Tiow Chye, CEO of Mapletree Logistics Trust Management (MLTM), the manager of MapleLog, said: ‘This area is ideally located, being midway between the Chinese border and the Kwai Chung container terminal. This will be our fifth property in the Shatin area, bringing our total warehouse space in this area to approximately 163,000 square metres.

‘With a suite of properties in this vicinity, we have the capacity and flexibility to meet tenants’ various needs. This consolidates our position as a leading logistics real estate solution provider in this area.’

MLTM announced the deal yesterday, saying that MapleLog had - through its wholly owned Cayman Islands special purpose vehicle - inked a conditional sale-and-purchase agreement with Ever Gain Company Ltd to buy the fifth to the ninth floors of the Tai Sang Shatin Warehouse Centre.

Ever Gain will lease back the property for five years.MLTM said the acquisition would be accretive to MapleLog’s distribution per unit (DPU). The pro forma financial effect of the acquisition on the DPU for the financial year ended Dec 31, 2006, will be an additional 0.01 Singapore cent per unit.

MLTM added that it expected to see good demand for logistics real estate in the Shatin area, thanks to strong economic growth in Hong Kong for the last three years.

‘Hong Kong’s close ties with mainland China has benefited the economy in several ways - most importantly, through the re-export of (China) goods,’ MLTM’s statement to the Singapore Exchange (SGX) yesterday said.

‘The rising demand for warehouse space from businesses supporting the China hinterland, coupled with the limited supply of new logistics space in Hong Kong, is expected to sustain positive rental reversions.‘

The recently completed Hong Kong-Shenzhen Western Corridor as well as the Route 8 linking Hong Kong International Airport to Shatin, which is expected to complete in mid-2009, will further enhance the connectivity of the Shatin area,’ the statement added.

MLTM expects the acquisition - which it intends to fund entirely by debt - to be completed by the third quarter of this year.

‘However, this does not preclude the manager from exploring alternative means of funding should the need arise,’ MLTM said.

Source: The Business Times, 11 July 2007