Mapletree Logistics Trust (SGX: M44U), or MLT for short, is the first of the trio of Mapletree REITs to release its results for the 2nd quarter, as well as for the first half of the fiscal year ended 30 September 2024 yesterday evening (22 October) – for information, Mapletree Pan Asia Commercial Trust will be reporting its results tomorrow (24 October) evening, and then Mapletree Industrial Trust next Tuesday (29 October) evening.

For the uninitiated, MLT invests in logistics properties in Asia. As of 30 September 2024, its portfolio comprises 186 properties in 9 countries (Singapore, Australia, China, Hong Kong, India, Japan, Malaysia, South Korea, and Vietnam) with a total assets under management of S$13.4 billion.

In this post, you will find my review of MLT's latest results in terms of its financial figures, portfolio occupancy and debt profile, as well as its distribution payout to unitholders.

Let's get started.

Key Financial Figures (Q2 FY2023/24 vs. Q2 FY2024/25, and 1H FY2023/24 vs. 1H FY2024/25)

In this section, you'll find MLT's latest financial figures reported for the 2nd quarter, as well as for the 1st half of the financial year, compared against the figures reported in the corresponding periods last year:

Q2 FY2023/24 vs. Q2 FY2024/25:

My Observations: Overall, it was a weaker set of results reported by MLT, with gross revenue, net property income, and distributable income to unitholders all recording a single-digit percentage decline.

The 1.8% and 2.1% year-on-year decline in its gross revenue and net property income to S$183.3 million and S$158.6 million respectively can be attributed to lower contribution from existing properties mainly in China, absence of revenue contribution from divested properties, along with a weaker Japanese Yen, South Korean Won, and Vietnamese Dong against the strong Singapore Dollar.

However, this was partly offset by higher contribution from existing properties in Singapore and Australia, along with contribution from acquisitions in Malaysia and Vietnam completed in Q1 FY2024/25, as well as acquisitions in India completed in Q4 FY2023/24.

An increase in borrowing costs (by 8.2%, due to higher average interest rate on existing debts, incremental borrowings to fund acquisitions made in Q1 FY2024/25 as well as in Q4 FY2023/24), together with amount distributable to perpetual securities holders (by 12.6%) saw the REIT's distributable income to unitholders tumble by 9.1% to S$102.3 million.

1H FY2023/24 vs. 1H FY2024/25:

My Observations: Similar to its results reported for the 2nd quarter, MLT's financial results for the 1st half of FY2024/25 was also a weaker one – with a similar scale decline seen in its top- and bottom-lines.

Gross revenue inched down by 1.1% year on year to S$365.0 million due to lower contributions from existing properties mainly from China, absence of revenue contribution from divested properties, and a weaker Japanese Yen, South Korean Won, Chinese Yuan, and Vietnamese Dong against the strong Singapore Dollar.

However, this was partially offset by higher contribution from existing properties in Singapore and Australia, contribution from acquisitions in Malaysia and Vietnam completed in Q1 FY2024/25, and full period contribution from acquisitions in Japan, South Korea, Australia, and India completed in the previous financial year 2023/24.

Property operating expenses saw a 1.9% year on year increase to S$49.7 million, mainly due to contribution from acquisitions completed in Q1 FY2024/25 and FY2023/24 and higher utilities expenses. This resulted in the REIT's net property income recording a 1.5% year-on-year decline to S$315.3 million.

As a result of a 8.8% year-on-year increase in borrowing costs (mainly due to higher average interest rate on existing debts, incremental borrowings to fund its acquisitions made in Q1 FY2024/25 as well as in FY2023/24), and a 6.3% year-on-year increase in amount distributable to perpetual securities holders, the amount distributable to unitholders saw a 8.2% year-on-year drop to S$206.0 million.

Portfolio Occupancy Profile (Q1 FY2024/25 vs. Q2 FY2024/25)

One of the headwinds faced by MLT at the moment is the occupancy rate, as well as the rental reversion of its properties in China. To recap, in the 1st quarter, the occupancy rate of its properties in the country is the only one among all the geographic locations the REIT has properties in that is under 95%; in terms of rental reversion, it is also the only one that has registered a negative rental reversion of -11.3%, with rental reversions in the other geographical locations at positive percentages.

3 months on, has the situation improved? Let us take a look at MLT's portfolio occupancy profile in the table below – where you will find a comparison of the statistics reported for the current quarter under review (i.e., Q2 FY2024/25 ended 30 September) against that reported in the previous quarter 3 months ago (i.e., Q1 FY2024/25 ended 30 June):

My Observations: MLT’s portfolio occupancy continues to remain at a strong level of 96.0%, with Malaysia the only country that saw a decline in occupancy (from 97.7% in Q1 FY2024/25 to 97.5% in Q2 FY2024/25). Also, the occupancy rates of the properties in all its geographical locations are at least 93.1% occupied.

The only slight negative in my personal opinion was its rental reversion – particularly, the rental reversions in China fell by a further 0.9 percentage points (pp) to -12.2% (from -11.3% in the previous quarter). Apart from that, positive rental reversions were recorded in the geographical locations.

Hence, if rental reversions in China were excluded, MLT's rental reversion would be at +3.6% instead.

Last but not least, lease expiries are also well-staggered out – with 15.7% of leases due for renewal in the 2nd half of the current financial year 2024/25, as well as 29.1% and 21.7% of leases due for renewal in FY2025/26 and FY2026/27 respectively. The remaining 33.5% of the leases will only be due for renewal in FY2027/28 or later.

Debt Profile (Q1 FY2024/25 vs. Q2 FY2024/25)

One of the things I like about MLT is its healthy debt profile, with aggregate leverage consistently remaining just below 40%, as well as having over 80% of borrowings hedged to fixed rates, which reduces the impact that the current high interest rate environment have on distribution payouts.

Just like how I have reviewed the logistics REIT's portfolio occupancy profile in the previous section, in the table below, you will find a comparison of its debt profile for the current quarter under review (i.e., Q2 FY2024/25) against that recorded in the previous quarter 3 months ago (i.e., Q1 FY2024/25):

My Observations: Aggregate leverage inched up by 0.6pp to 40.2% due to higher net translated loans due to a stronger Japanese Yen against the Singapore Dollar, as well as additional loans drawn to fund asset enhancement initiatives. However, at its current level, it is still a healthy one in my opinion.

As far as debt maturity ahead is concerned, it has about 2% of borrowings due to refinancing in the 2nd half of FY2024/25 (which is minimal). Over the next 4 financial years (between FY2025/26 and FY2028/29), it has about 17% of borrowings due for refinancing each year, with 29% of borrowings due for refinancing only in FY2029/30 or later.

Distribution Payout to Unitholders

The 3 Mapletree REITs pay out a distribution to the unitholders once every quarter – something which I like as it provides me with a more regular stream of income.

For the 2nd quarter of FY2024/25, a distribution payout of 2.027 cents/unit was declared. Compared to its payout of 2.268 cents/unit the same time period last year, this is a 10.6% decline, which can be attributed to an enlarged unit base, along with a 9.1% year-on-year drop in the amount distributable to unitholders.

Just like the previous quarter, the distribution reinvestment plan will be applied this time round – meaning you have a choice to cash (which is the default option if you do not indicate any choices), receive units of the REIT, or a mixture of both. You will receive more information about this in due course.

Finally, if you are a unitholder of MLT, do take note of the following dates about its distribution payout:

Ex-Date: 29 October 2024
Record Date: 30 October 2024
Payout Date: 17 December 2024

CEO Ms Jean Kam's Comments and Outlook (from the REIT's Press Release):

"Amidst ongoing macroeconomic uncertainty, our teams' continued focus on active lease management and tenant engagement has resulted in improved portfolio occupancy of 96.0% and positive rental reversions across most markets.

We are optimising our debt mix to proactively manage the impact of higher borrowing costs, a significant headwind which we continue to face. Over the quarter, we swapped a portion of USD, AUD and HKD loans into CNH, capitalising on China's lower interest rates. Separately, we issued S$180 million of 4.30% fixed rate perpetual securities to redeem S$180 million of perpetual securities with a higher rate of 5.2074%.

With over S$220 million in acquisitions and S$130 million in divestments announced or completed year-to-date, we remain focused on the execution of our portfolio rejuvenation strategy, which will bolster our resilience over the long term."

Closing Thoughts

The weaker set of financial figures was pretty much expected, as the negative rental reversion of -11.3% recorded in the Q1 FY2024/25 for new and/or renewed leases in China, coupled with the fact that the country contributed 17.7% towards the REIT's gross revenue for 1H FY2024/25, is bound to negatively impact to a certain extent.

With a further deterioration in terms of rental reversion for new and/or renewed leases in China for the current 2nd quarter of FY2024/25 under review (at -12.2%), my opinion is that the REIT's results is likely going to record a similar decline (by a single-digit percentage) in the remaining 2 quarters of the current financial year 2024/25.

In terms of its distribution payout to unitholders, for the 2nd half of FY2024/25, it will continue to decline by a high single-digit percentage to a low double-digit percentage (by around 10+%), due to higher borrowing costs (as any interest rate cuts by the US Federal Reserve will take time to be reflected), along with a lower contribution from its properties in China.

With that, I have come to the end of my review of Mapletree Logistics Trust's latest results for the 2nd quarter of FY2024/25 ended 30 September. I hope you've found the contents presented above useful. However, do take note that all the opinions within are purely mine which I am sharing for educational purposes only. They do not represent any buy or sell calls for the REIT's units. You're strongly encouraged to do your own due diligence before you make any investment decisions.

Related Documents

• Press Release
• Financial Statements
• Presentation Slides

Disclaimer: At the time of writing, I am a unitholder of Mapletree Logistics Trust.

The post A Look into Mapletree Logistics Trust's Q2 & 1H FY2024/25 Results first appeared on The Singaporean Investor.