Offering of 594,913,000 units1 in MIT (the “Units”), subject to Over-Allotment Option, priced at the top end of the indicative offering price range at S$0.93 per Unit (the “Offering Price”)
Annualised distribution yield of about 7.6% for the Forecast Year 2010/20112 and 8.0% for the Projection Year 2011/20123
Total gross proceeds of about S$1,187.6 million to be raised
Singapore – Mapletree Industrial Trust (“MIT”), a Singapore-focused real estate investment trust (“REIT”) and one of the largest landlords of privately-owned multi-user flatted factory space in Singapore has registered its prospectus (the “Prospectus”) with the Monetary Authority of Singapore today, in connection with its listing on the Main Board of Singapore Exchange Securities Trading Limited (the “SGX-ST”). With an extensive portfolio consisting of high quality industrial properties, as well as a large and diversified tenant base, MIT presents investors an attractive opportunity to participate in Singapore’s robust economy and resilient industrial property market.
Offering Information
Mapletree Industrial Trust Management Ltd., as manager (the “Manager”) of MIT, is making an offering (the “Offering”) of 594,913,000 Units for subscription.
The Offering comprises:
(i) an international placement of 488,768,000 Units to investors (the “Placement Tranche”); and
(ii) an offering of 106,145,000 Units to the public in Singapore (the “Public Offer”), of which 25,500,000
Units are reserved for subscription by the directors, management, employees and business associates of Mapletree Investments Pte Ltd (“MIPL” or the “Sponsor”) and its subsidiaries.
As a result of positive feedback from institutional investors during the book-building process, the Units have been priced at the top end of the indicative offering price range at S$0.93 per Unit.
Concurrently with, but separate from the Offering, MIPL, a leading Asia-focused real estate capital management company and the sponsor of MIT, will subscribe for 359,449,0004 Units (the “Mapletree Cornerstone Subscription Units”) at the Offering Price through two of its wholly-owned subsidiaries. This reinforces the Sponsor’s strong support of and commitment to MIT.
In addition, MIT has secured prominent cornerstone investors such as Stichting Depository APG Tactical Real Estate Pool, American International Assurance Company Limited, Singapore Branch, American International Assurance Company (Bermuda) Limited, Henderson Global Investors, Columbia Wanger Asset Management, LLC, D.E. Shaw Valence International, Inc. and Prudential Asset Management (Singapore) Limited (acting for itself and on behalf of one or more investment funds and clients), who have subscribed for an aggregate of 322,578,000 Units (the “Cornerstone Units”). These Cornerstone Units are also separate from the Offering.
The Public Offer opens at 9.00 a.m. on Wednesday, 13 October 2010 and closes at 8.00 a.m. on Monday, 18 October 2010. The Units are expected to commence trading on the SGX-ST at 2.00 p.m. on Thursday, 21 October 2010.
Overview of Mapletree Industrial Trust
MIT’s principal investment strategy focuses on investing, directly or indirectly, in a diversified portfolio of income-producing real estate used primarily for industrial purposes, whether wholly or partially, in Singapore, as well as real estate-related assets. These include, but are not limited to, business park buildings, flatted factories, stack-up/ramp-up buildings, hi-tech and light industrial buildings and general industrial buildings, but exclude properties used primarily for logistics purposes. MIT is structured as a conventional REIT and is not a Shariah-compliant REIT.
MIT is managed by Mapletree Industrial Trust Management Ltd., which has an experienced team equipped with extensive real estate knowledge and a proven track record in sourcing and actively managing a large portfolio of assets. The Manager is a wholly-owned subsidiary of MIPL.
Mr Tham Kuo Wei, Chief Executive Officer of the Manager, said, “MIT is attractive to investors because of its extensive portfolio of high quality industrial space, coupled with a good spread of tenants across industries. The response to the offering has been particularly encouraging given the interest shown by institutional investors who see MIT as a means to ride on Singapore’s robust economy and resilient industrial property market.”
IPO Portfolio
Valued at approximately S$2.1 billion as at 31 August 2010, MIT’s initial portfolio (the “IPO Portfolio”) comprises 70 industrial properties strategically located across Singapore, with an aggregate net lettable area (“NLA”) of approximately 1.1 million square metres and a total gross floor area of approximately 1.5 million square metres.
| IPO Portfolio | No. of Properties |
|---|---|
| Business park buildings | 3 |
| Flatted factories | 53 (Grouped into 22 clusters5 |
| Stack-up/ ramp-up buildings | 7 (Grouped into 1 cluster)5 |
| Light industrial buildings | 66 |
| Warehouse | 1 |
| Total | 70 |
Key Investment Highlights
Key Investment Highlights of the IPO Portfolio include:
Potential for organic rental revenue growth in the next few years as MIT’s average rents catch up with market rents aided by a short weighted average lease duration to expiry of 2.6 years as at 30 June 2010
Singapore-based portfolio that is poised to maintain its strong performance, leveraging on
Singapore’s robust economic outlook, strong fundamentals of the manufacturing sector, and a resilient industrial property sector
Largest private landlord in Singapore for multi-user flatted factory space with 11.2% market share by NLA
Largest tenant base among Singapore-listed industrial REITs with over 1,500 tenants ranging from multi-national corporations from the 2010 Fortune Global 500 and Forbes Global 2000 lists of companies and other publicly listed companies to small and medium enterprises
Diversified and quality tenant base from a multitude of industries including high value-added sectors such as machinery, electronics and electrical products, engineering, info-communications and biomedical, ensures a comprehensive source of rental income contribution, as well as non-reliance on any one particular trade sector
Upside potential from increasing occupancy levels based on occupancy rate of 90.9% for the month of June 2010, and high average tenant retention rate of 84.0% for the year ended 31 March 2010, supporting a steady rental revenue base with room to grow
Key Strategies
The Manager intends to achieve its objective of providing Unitholders with an attractive rate of return for their investment through regular and stable distributions to Unitholders and achieving long-term growth in DPU and net asset value per Unit, while maintaining an appropriate capital structure, through undertaking the following strategies:
- Active asset management strategy – Pro-active measures such as (but not limited to) tenant management, active leasing, as well as asset refurbishment and enhancement initiatives to maintain the competitive positioning of the assets to improve the returns from MIT’s portfolio
- Acquisition growth strategy – Source for and acquire assets that fit within MIT’s investment strategy to enhance the returns to Unitholders and improve potential opportunities for future income and capital growth. This includes leveraging on the Sponsor’s extensive network, strong development expertise and a pipeline of income-producing assets on a Right of First Refusal basis
- Capital and risk management strategy – Employ an appropriate mix of debt and equity in financing acquisitions, and utilise interest rate hedging strategies where appropriate. The Manager has obtained, in respect of MIT, an expected credit rating of BBB+ from Fitch Inc. (“Fitch”)7
- Selective development strategy – Endeavour to selectively undertake development activities which may include (but will not be limited to) built-to-suit developments
Use of Proceeds
The Manager will raise gross proceeds of approximately S$1,187.6 million from the Offering as well as the Mapletree Cornerstone Subscription Units and the Cornerstone Units and intends to draw down S$837.0 million from an unsecured floating rate term loan facility from DBS Bank Ltd., Standard Chartered Bank and Citibank, N.A., Singapore Branch (“New Debt Facility”) on the Listing Date.
The total cash proceeds raised from the Offering, the Mapletree Cornerstone Subscription Units and the Cornerstone Units, as well as the amount drawn down from the New Debt Facility will be used towards the following:
- S$183.3 million for the purchase consideration for MSIT8 comprising acquisition of the MSIT Units for S$2.00, repayment of MSIT’s related party loans of S$58.3 million, repayment of MSIT’s bank borrowings of S$90.0 million and payment of distribution of retained earnings of S$35.0 million to existing MSIT unitholders;
- S$286.7 million payment of the MIT Private Trust Distribution9 to the Existing MIT Unitholders10 ;
- S$544.5 million partial redemption of the MIT Private Trust Units (as defined in the Prospectus);
- repayment of S$977.8 million of MIT’s existing Private Trust debt;
- payment of issue and debt related costs; and working capital.
DBS Bank Ltd. and Goldman Sachs (Singapore) Pte. are the Joint Global Coordinators for the Offering. DBS Bank Ltd., Goldman Sachs (Singapore) Pte., Citigroup Global Markets Singapore Pte. Ltd. and Standard Chartered Securities (Singapore) Pte. Limited are the Joint Bookrunners, Issue Managers and Underwriters for the Offering. CIMB Securities (Singapore) Pte. Ltd. , Overseas-Chinese Banking Corporation Limited and United Overseas Bank Limited are the Co-Managers and Sub-Underwriters for this Offering.
- Including 25,500,000 Units reserved for subscription by the directors, management, employees and business associates of MIPL and its subsidiaries.
- Based on the offering price of S$0.93 per Unit and the annualised distribution per Unit (“DPU”) forecast for the period from the Listing Date (as defined in the Prospectus) to 31 March 2011, together with the accompanying assumptions in the Prospectus.
- Based on the offering price of S$0.93 per Unit and the DPU projection for the full financial year from 1 April 2011 to 31 March 2012, together with the accompanying assumptions in the Prospectus.
- Through Mapletree Dextra Pte. Ltd. and Sienna Pte. Ltd., both of which are wholly-owned subsidiaries of the Sponsor.
- A property “cluster” consists of one or more individual buildings situated on the same land lot or adjoining land lots.
- Includes 26 Woodlands Loop, which is a property comprising three individual buildings.
- The Manager expects Fitch to assign its final rating for MIT on the Listing Date and will make an announcement on SGXNET of the final rating when it has been assigned to MIT. According to Fitch, “BBB” credit ratings indicate that expectations of default risk are currently low and that the capacity for payment of financial commitments is considered adequate but adverse business conditions or economic conditions are more likely to impair this capacity. Modifiers “+” or “-“ are appended to a rating to denote relative status within major rating categories.
- Mapletree Singapore Industrial Trust (“MSIT”), which was constituted as a private trust on 27 March 2006, currently owns six light industrial buildings in Singapore. MSIT acquired five of its properties from various third party vendors and developed one of its properties (being Tata Communications Exchange) over a period of time (together, the “MSIT Portfolio”). MIT will acquire 100.0% of MSIT, a wholly-owned subsidiary of Mapletree Industrial Fund Ltd (“MIF”), on the Listing Date.
- The distribution of MIT’s remaining net income (net of tax payable thereon by MIT) for the period from 1 July 2008 to the day immediately preceding the Listing Date (including for the avoidance of doubt the fair value gains) and such amount of distributions distributed to the Existing MIT Unitholders as the Offering Price is greater than S$0.88 per Unit.
- The existing Unitholders of MIT as at 12 October 2010 being Singapore Industrial Investments Limited, Mapletree Dextra Pte. Ltd., MIF and JCR1 Pte. Ltd.
