Mapletree raises $275m to buy HNA logistics assets

Singapore group raises equity to buy five warehouses from a unit of embattled Chinese conglomerate. It joins a number of Singaporean Reits and trusts in buying assets before further US rate hikes.

Mapletree Logistics Trust (MLT) raised S$375 million ($275 million) from a private placement of new investment units on Wednesday to fund the purchase of assets from debt-ridden Chinese conglomerate HNA Group.

The deal represents the latest significant expansion for MLT, which has grown steadily since listing in 2005. For HNA, it's another step back from a global acquisition spree that turned a regional airline into a global corporate empire.

Wednesday’s placement of 309.9 million new investment units was 2.4 times oversubscribed by institutional investors after being offered through an accelerated bookbuild after market close, MLT said in a statement. 

The trust sold the units at S$1.21 each, slightly below the mid-point of the S$1.196 to S$1.234 marketed range and represented a discount of 4.4% to MLT’s volume weighted average price of S$1.2651 on Wednesday.

The placement, the second-largest equity deal out of Singapore this year behind Kakao’s $1 billion GDR sale in January, was jointly organised by Citigroup, DBS, HSBC, BNP Paribas and Goldman Sachs.

MLT will use the bulk of the proceeds to finance the acquisition of five ramp-up warehouses in Singapore from CWT International for S$778 million. Hong Kong-listed CWT International is a subsidiary of embattled Chinese conglomerate HNA Group that was used to fully acquire Singaporean logistics firm CWT last year.

As it stands, the transaction represents a major divestment by HNA as it sells more than half of CWT’s assets – less than 18 months since acquiring them – to potentially reduce its huge plie of debt. The divestment forms part of HNA’s sale of overseas assets it had acquired in recent years, including stakes in Hilton Worldwide, Avolon and Deutsche Bank.

For MLT, the deal marks its third acquisition of logistics assets over the last two years. In May, the trust bought a 50% stake in 11 logistics properties in China for S$205 million. That was nine months after it paid S$848 million for a warehouse in Hong Kong.

This time around, it is buying five logistics properties with net leasable area of 3 million square feet that yield 6.2% annually. Already Singapore’s biggest logistics trust by market capitalisation, MLT will increase its portfolio value by 12% to S$7.3 billion from S$6.5 billion after the CWT purchase.

MLT expects its distribution per unit will increase by 4.2% to S$7.938 after the acquisition.

The trust is joining a number of its peers in raising equity to fund asset purchases this year as debt-financed acquisitions become more costly amid rising US interest rates.

For the CWT assets, it is paying S$340 million in cash while settling the remaining $438.5 million with a credit facility that has an average interest rate of 3.5% per annum.

MLT said the acquisition was in line with its plan to rejuvenate its portfolio and selectively divest older, low-yielding properties with limited redevelopment potential.

This story has been updated to correct the sum raised in the placement

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