Mapletree Logistics Trust Buys 20th South Korean Shed For $74M

Mapletree Logistics Trust has acquired a newly-built warehouse in South Korea for KRW 88.5 billion ($74 million) as the Singapore-based trust expands its footprint in one of Asia’s largest e-commerce markets.

The trust’s manager told the Singapore Exchange late Monday that MLT is in the process of acquiring the 4-storey Baeksa Logistics Centre in the city of Icheon, southeast of Seoul, from an undisclosed seller to add 41,148 square metres (442,400 square feet) of additional storage in its growing Korean portfolio.

“The logistics industry has benefitted from recent structural trends such as growing e-commerce and building supply chain resiliency,” said Ng Kiat, chief executive of MLT’s manager. “This acquisition, with its modern specifications and 100% occupancy underpinned by a leading ecommerce company, is expected to be yield-accretive to MLT.”

Purchasing the ramp-up dry storage facility marked MLT’s third major acquisition in Korea over the past year as the manager of the Temasek Holdings-linked real estate investment trust positions itself to profit from the country’s rising demand in storage amid an e-commerce boom.

Building Korean Portfolio

Completed in December, MLT said the entire facility at 322 Cheongbaengni-ro, Baeksa-myeon is leased out to local home furnishing e-commerce firm Howser on a lease set to expire in 5.1 years.

The trust estimates that, based on the transaction price, it will receive a four percent yield from the investment on a net property income basis. Upon completion of the deal, which is expected within this month, the portion of their revenue coming from Korean assets will increase to 36 percent of the total from 31 percent currently.

After including KRW 5.8 billion in for stamp duty and professional fees, as well as the manager’s 1 percent fee, the total cost of the acquisition to MLT unit-holders is close to KRW 94.3 billion, or KRW 2.3 million per square metre of space. The purchase price of KRW 88.5 billion represents a 3.4 percent discount from the asset’s valuation of KRW 91.5 billion as of December 2021.

The warehouse sits on a 30,000 square metre freehold site in northeast Icheon within the Yongin-Icheon logistics hub, a popular location among e-commerce firms serving the Seoul metropolitan area. This week’s acquisition is MLT’s second pick-up of a property in the logistics hub some 60 kilometres (37 miles) away from Seoul, after the SGX-listed trust purchased the Yeoju Logistics Centre in November last year for KRW 135 billion.

“With its new and modern specifications and strategic location with excellent connectivity, the property is in a favourable position to ride on positive trends from the e-commerce sector,” the statement read.

MLT’s latest warehouse trophy expanded its Korean portfolio to 20 sheds, after it spent KRW 280 billion in February last year purchasing a combined portfolio of five warehouses in the Yongin-Icheon hub from two REITs managed by Mirae Asset Global Investments.

Representatives from Mapletree declined to disclose the seller of the property.

Between its two most recent Korean acquisitions, the logistics-focused REIT last month announced that it is in the process of acquiring two logistics sites in Selangor Malaysia, for $16 million. That deal was announced a few weeks after MLT sealed a $1-billion deal to buy 17 warehouses across China, Vietnam and Japan.

Focus on E-Commerce

Mapletree is banking on the Korean e-commerce sector’s rising demand for storage after online sales grew at a compound annual growth rate of 16 percent over the past four years to make the country the third largest market in Asia for online shopping and among the most developed globally.

In its latest market report, Savills predicted that investor appetite for Korean logistics assets will remain strong on the back of the country’s robust online retail sector and that the northern Asian nation would continue to gain ground on leading logistics markets like China.

Despite the continued climb in demand, the property consultancy projected that competition among storage providers will become fierce as supply eclipses demand over the near term as developers bring to market 11.9 million square metres of new storage space within the next two years.