Mapletree Logistics Trust acquiring Seoul warehouses for $46 mil

SINGAPORE (Nov 8): Mapletree Logistics Trust is acquiring Wonjin Logistics Centre, a logistics property in South Korea, for KRW37.85 billion ($46.4 million).

The property comprises two blocks of multi-tenanted dry warehouses with a total gross floor area (GFA) of about 29,325 sqm and land area of 31,055 sqm. It is located in Gyeonggi-do which is popular with third-party logistics service providers (3PLs) and distributors due to its proximity to Seoul and easy accessibility.

Developed over two phases (Block A and Block B) in 2007 and 2018, the property has floor-to-ceiling height of 9.5 metres and floor loading capacity of up to 3 tonne/sqm. Block A, with a GFA of about 21,065 sqm, is designed with cross-docks. Block B, with 8,260 sqm of GFA, is designed with enhanced features such as direct ramp access to all floors as well as dual-layer walls to minimise dew condensation.

The property has been valued at KRW40.9 billion by CBRE Korea as at Oct 30.

Mapletree Logistics Trust Management (MLTM) says rising e-commerce growth and a growing third-party logistics market continue to drive demand for modern warehouse space in locations nearby Seoul.

Ng Kiat, CEO of MLTM, says, “We are excited to expand our network in South Korea, the fourth largest 3PL market in Asia Pacific, to support our customers’ growing demand for quality logistics space in prime locations. Following this acquisition, MLT will have 11 properties in Gyeonggi-do serving the Seoul metropolitan area and a total of 12 properties with over 350,000 sqm of leasable space in South Korea.”

The property is fully leased to three established 3PLs with a weighted average lease expiry of 4.3 years (by net lettable area). Seller Wonjin Logistics, which will lease back over 60% of the property’s GFA, is a prominent local 3PL and its major customers include well-known corporations such as Lotte, Amore Pacific and Carrier. The remaining space is leased to one of the largest logistics companies in South Korea as well as a fast-growing 3PL in Asia, especially in the fashion industry.

The acquisition, with an initial net property income yield of 6.5% based on the purchase price of KRW37.85 billion, is expected to be accretive to MLT’s distribution.

The acquisition will be funded by debt and is expected to be completed by 4Q FY18/19. Upon completion, MLT’s aggregate leverage ratio will be approximately 39.2%, while MLT’s total portfolio will comprise 141 properties with a book value of $7.8 billion.

MLT units closed unchanged at $1.21 on Thursday.