Mapletree Sells Japanese Warehouse Facility to REIT for JPY 21.9B

Mapletree Logistics Trust Management has agreed to acquire 98.47 percent of a newly built logistics facility in western Japan’s Kobe as the trust strengthens its portfolio to meet the rising demand for logistics space in the country, according to a stock exchange announcement.

Under the terms of the proposed acquisition, a subsidiary of Mapletree Logistics Trust will acquire the Mapletree Kobe Logistics Centre from a unit of Mapletree Investments, which controls the trust’s manager, for JPY 21.9 billion ($200 million), based on an agreed property value of JPY 22.2 billion.

The acquisition of the ten-month old property, which is subject to unitholder approval, will add 84,783 square metres (912,597 square feet) to the REIT’s Japanese portfolio, bringing its total floor space in Japan to 418,689 square metres of net leasable area across 17 properties.

Mapletree Investments will retain the remaining 1.53 percent effective interest.

Strengthening Japan Footprint

“This prime grade A logistics facility with double rampways will strengthen MLT’s footprint in Japan, an attractive logistics market with a scarcity of grade A logistics properties,” said the manager’s chief executive office, Ng Kiat.

Located 33 kilometres from Osaka, the freehold four-storey property is within half an hour by road of Kobe Port and Kobe Airport, with its modern access system providing enhanced entry and exit from the facility for vehicles.

Tenanted by local apparel retailer Workman and third-party logistics companies such as Nippon Express which serves e-commerce titan Alibaba, the property is 99.7 percent occupied with a weighted average lease expiry by net lettable area of 4.2 years.

Capitalising on Logistics Demand

In announcing the acquisition the REIT manager pointed to favourable demand-supply dynamics which are fueling the growth of e-commerce as supporting Japan’s logistics market in general and the future of the Kobe facility.

Japan was Asia Pacific’s second-largest e-commerce market in Asia Pacific in 2018 with sales of $87 billion, according to a CBRE report cited by Mapletree, while the country’s e-commerce market is predicted to grow at a compound annual rate of 10 percent from 2018 through 2023.

This expansion in e-commerce is among the factors creating what the trust manager identifies as a shortfall in high quality warehouse space in Japan, where only 5 percent of logistics facilities currently qualify as grade A, compared with 63 percent in the US and 46 percent in Singapore.

Modernising the REIT’s Portfolio

The proposed acquisition forms part of the REIT’s asset rejuvenation programme, which aims to modernise its global portfolio through selective divestments of older assets and the redeployment of the capital released into investments with higher growth potential.

In line with this strategy, the trust nine months ago divested five older warehouses in Japan, selling the set of properties to Godo Kaisha T&C for a combined JPY 17.52 billion, according to a regulatory filing.

Located in Saitama, within the Greater Tokyo catchment area, the facilities had an average age of 12.8 years.

Following the acquisition of the Kobe Logistics Centre, the average age of the Mapletree Logistics Trust’s Japanese properties will be reduced to 10.9 years, while the REIT’s global asset value will be S$8.55 billion.

Growing Asia Pacific Footprint

The deepening of the REIT’s logistics connectivity in Japan follows a pair of other Asia Pacific acquisitions as Mapletree Logistics Trust continues to diversify its holdings in the region.

Just seven days ago, the trust announced the acquisition of a logistics property in the southeastern region of the Seoul Metropolitan Area for KRW 35.8 billion ($30 million) from DC Deokpyung LLC.

Comprised of four blocks of dry warehouses, the property is leased to a domestic third-party logistics service provider and a manufacturer of commercial packaging paper on a weighted average lease term to expiry of 6.2 years.

Just under two months prior to that South Korean acquisition, the Mapletree REIT purchased a 36 hectare (89 acre) logistics development site near Brisbane, Australia from Pointcorp for A$95 million ($64 million), according to a report by the Australian Financial Review.