Wednesday, July 23, 2008

MapletreeLog banking on rights issue


A RIGHTS issue will boost Mapletree Logistics Trust’s capacity for acquisitions, but the trust will only selectively take on deals that are highly accretive.

‘While we remain committed to our yield plus growth strategy, in the current environment, the manager’s immediate focus is to optimise yield from organic growth through extracting positive rental reversions and undertaking asset enhancements,’ said the CEO of Mapletree Logistics Trust Management (MLTM) Chua Tiow Chye.

‘We believe that with a robust balance sheet after the rights issue, we are well positioned to operate in the current more uncertain times,’ he said in a statement.

‘While current market conditions do make acquisition opportunities more readily available, we will evaluate these selectively and only if they are highly accretive.’

MapletreeLog’s unitholders approved a renounceable rights issue to raise around $606.7 million at an extraordinary general meeting on Friday. Of the net proceeds of around $591.6 million, $348 million or 59 per cent will be used to finance or refinance the acquisition of target properties.

Another $243 million will be used to repay debt, while the remaining proceeds will go towards general corporate or working capital needs.

MapletreeLog made the rights issue to strengthen its balance sheet - by lowering its gearing and improving its debt coverage ratio, for instance - and to increase the free float of its units.

‘Notwithstanding the dilution, we should still do better this year than last year,’ said MLTM’s deputy CEO and CFO Richard Lai at a briefing yesterday.

This could be due mainly to the full accounting of contributions from MapletreeLog’s earlier acquisitions and positive growth in its base properties.

MapletreeLog on Sunday reported distributable income of $22.6 million and available distribution per unit (DPU) of 2.04 cents for the second quarter ended June 30.

Both results were 28 per cent higher than in the same period last year.

Mapletree units ended trading at 70 cents yesterday, 0.5 cent down.


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