Mapletree Logistics Trust has defended the slow progress of its planned S$1 billion asset-divestment programme, saying weak transaction activity and unattractive offers have made it difficult to sell properties at reasonable prices.
The Singapore-listed real estate investment trust has completed about S$300 million of the S$1 billion disposal pipeline identified during its 2024/2025 financial year. Much of the remaining portfolio marked for sale is located in mainland China and Hong Kong, where property valuations and investment demand have weakened.
MLT’s manager provided an update in a Singapore Exchange filing on Wednesday, July 15, ahead of the trust’s annual general meeting scheduled for July 20.
According to the manager, subdued investment activity and a wide gap between buyers’ offers and sellers’ expected prices have delayed potential transactions. In the current market, prospective buyers are seeking significant discounts, while MLT wants to avoid selling income-producing properties below what it considers fair value.
Some unitholders have called on the trust to accelerate its exits, particularly from China, even if that means accepting losses. Investors argue that faster asset sales could reduce MLT’s debt levels, release capital and allow the trust to invest in markets offering stronger returns.
However, the manager said hurried disposals at heavily discounted prices would not serve investors’ interests. The properties involved continue to generate rental income and maintain healthy occupancy, reducing the need for emergency sales.
The debate has intensified because Greater China represents a large share of MLT’s overall portfolio. Assets in the region account for about 41 per cent of the trust’s total assets under management but contribute approximately 32 per cent of gross revenue and net property income.
This difference has raised questions among investors about whether the capital committed to the region is producing sufficient returns.
MLT’s manager said the figures should be considered alongside market-specific factors. In Hong Kong, for example, lower property yields partly reflect the historically high prices paid for assets rather than a significant decline in their operating performance.
The trust has also benefited from falling borrowing costs in mainland China. Local financing rates have declined from roughly 4.4 per cent four years ago to around 2.5 per cent, enabling MLT to use more affordable renminbi-denominated loans and reduce pressure on its balance sheet.
Alongside traditional property sales, MLT is exploring another way to reduce its exposure to Chinese assets. Its manager is working with sponsor Mapletree Investments to establish a renminbi-denominated investment fund under a “China-for-China” strategy.
The proposed structure could allow selected logistics properties in China to be transferred or sold to domestic investors. MLT believes the model could provide an alternative source of liquidity while avoiding the deeply discounted offers currently seen in the wider transaction market.
The manager said the trust still intends to gradually reduce the proportion of its portfolio located in Greater China. This would be achieved through selective asset sales and investments in other regions rather than a rapid withdrawal at unfavourable prices.
MLT therefore plans to continue its S$1 billion divestment programme at a measured pace, prioritising acceptable valuations and long-term unitholder returns over completing the disposals within a fixed period.
