Mapletree Industrial Trust has announced the sale of three properties to Brookfield Asset Management for $535.3 million and use the proceeds to lower debt.
The three properties are The Strategy and The Synergy at International Business Park, and the Woodlands Central Cluster.
The price is a 2.6% premium over the independent valuations of the properties as of March 31, and 22.1% over their original investment cost of $438.4 million.
Ler Lily, CEO of the manager says that the divestment aligns with her proactive asset management strategy of optimising portfolio composition while maintaining financial agility to seize new value-creating investment opportunities that will create sustainable returns.
Even with the completion of the divestment, Singapore assets remain a key component of MIT’s portfolio and account for approximately 44.4% of MIT’s assets under management.
"MIT’s properties in Singapore will continue to provide portfolio stability and growth, as we pursue portfolio rejuvenation and rebalancing efforts through selective divestments of properties and accretive investments," says Ler.
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On a pro forma basis, the transaction is expected to lower MIT’s aggregate leverage ratio from 40.1% as at March 31 March 2025 to 37.0% and improve its interest coverage ratio for the trailing 12 months from 4.3 times to 5.1 times.
In its May 16 note, DBS Group Research says this deal "will likely be positively viewed" as it can help increase debt capacity for future acquisitions.
"Given the volatile equity markets making it tough for the REIT to raise capital and divest accretively, the REIT has looked to 'unlock to invest', a value accretive strategy," says DBS, which has kept its "buy" call and $2.60 target price.
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DBS points out that the REIT with market vacancy rates exceeding more than 30%, its focus has been on back-filing the space by accepting lower rents. "The REIT has not been able to invest and scale up in this space, meaning that an exit is the better option."
DBS estimates that with an exit yield of 6.1%, the repayment of debt will likely result in a slight dip in DPUs going forward. "But we value the strategic intent towards creating debt capacity more in this climate," says DBS.
With renewed financial capacity to take on value accretive acquisitions, DBS believes that the REIT can deliver positive surprises, none of which is priced in for now.
DBS, noting that the REIT is now trading at FY2026 projected yield of 6.7%, continues to look "attractive".
