Mapletree Plans To List Reits, Snap Up New Assets

Source : The Business Times, October 24, 2007

Commercial trust may include VivoCity; company eyes big growth overseas.

Mapletree Investments intends to list a commercial trust with a $3-$3.5 billion portfolio in the next six months as it moves to grow its fee income and expand its footprint overseas, says chief executive Hiew Yoon Khong.

Mr Hiew: The greatest opportunities are in China, where Mapletree is looking at second-tier cities

‘Over the next four years we want to scale up our capital management business by being very active in key markets,’ he told The Business Times in a recent interview. Besides Singapore, the company is looking at China, India and Vietnam for acquisitions. And in the slightly longer term it is also interested in Taiwan, South Korea and Thailand - particularly their logistics and industrial sectors.

The plan is to bump up revenue from fee income to 50 per cent of overall revenue in the next three to five years - from just 9 per cent in Mapletree’s last financial year.

To grow the capital management business, the company has opted to look abroad. Right now only about 20 per cent of its portfolio is outside Singapore. But Mr Hiew said the proportion could be as high as 80 per cent in five years.

‘As a group, we hope to be able to break into one or two new markets a year,’ he said. The greatest opportunities, he believes, are in China, where Mapletree is now looking at second-tier cities. First-tier cities are ‘too crowded and the values are too high,’ he said.

In particular, Mapletree is trying to expand its commercial presence in Singapore and the region.

‘People know us as a logistics player, but as a company we are a lot more than that,’ Mr Hiew said. ‘Looking forward, we will be bidding for land to do development work. In Singapore, we are keen to have a bit more exposure to the office sector in particular.’

One way to do this is through the upcoming commercial trust - which the market has been waiting for.

The trust will likely contain VivoCity - Mapletree’s largest asset, with a book value of about $1.6 billion - as well as other commercial properties including office buildings Harbourfront Centre and PSA Building and nightspot St James Power Station, Mr Hiew said.

Mapletree is already lining up a pipeline of assets for the trust. In a break from tradition, the company this year started bidding for commercial land sites in Singapore.

In July it won a government land sales site at Anson Road/Enggor Street in a public tender that drew other big names such as CapitaLand and Keppel Land. Mapletree’s offer was 23 per cent higher than the next highest bid.

In addition, Mapletree is likely to launch a Reit based on assets in India, with its Indian property development partner Embassy Group, by the first half of 2008.

Market talk of Embassy’s Reit, which will be managed through a joint-venture partnership between Embassy and Mapletree, has been around since early this year. Mr Hiew confirmed plans for the Reit.

‘We will probably hold some sort of equity stake in the trust but that is not finalised yet,’ he said.

Mapletree has also secured a deal to co-manage the Lippo Group’s Indonesia-focused retail Reit. The prospectus for this Reit was lodged with the Monetary Authority of Singapore (MAS) last Friday.

Mr Hiew is also committed to growing Mapletree’s private equity franchises. For example, the company - together with its partner CIMB - will be launching its second Malaysia fund in the next six months.

Mapletree’s growing portfolio in Singapore and overseas will serve as an asset pipeline for both the existing Mapletree Logistics Trust and the new commercial trust, as well as any funds the company might set up in future.

‘We are very keen to support the growth of our Reits and fund business,’ Mr Hiew said.

With its asset-light strategy in place, the company will now be able to take on bigger projects and move faster on them.

Right now, assets under management stand at $2.2 billion, while Mapletree owns a further $4.8 billion of assets. Mr Hiew’s aim is to grow by $1 billion or so each year.

‘Four years ago we mapped out strategic initiatives for the company to enhance our value,’ he said. ‘When we review the programme now, we are happy with the progress to date but will look to scale up these businesses much more.’