THE SINGAPOREAN INVESTOR

Mapletree Logistics Trust's 3Q & 9M FY2024/25 Results Review

ljunyuan
Publish date: Wed, 22 Jan 2025, 09:50 AM
ljunyuan
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My name is Jun Yuan, and I am the owner of The Singaporean Investor. I am a full-time retail investor and trader since April 2017, and in this website, I'd be sharing with you my personal analyses of Singapore-listed companies, along with advices relating to investing, as well as trading. You can find out more about me here, and check out my long-term portfolio here.
Mapletree Logistics Trust's 3Q & 9M FY2024/25 Results Review

Mapletree Logistics Trust (SGX: M44U) is the first Asia-focused logistics REIT listed on the Singapore Exchange in July 2005. It was later included as one of the constituents of Singapore's benchmark Straits Times Index (STI) in December 2019.

As the name implies, it invests in logistics properties, and as of 31 December 2024, its portfolio comprises 183 properties in Singapore, Australia, China, Hong Kong, India, Japan, Malaysia, South Korea, and Vietnam with a total assets under management of S$13.4 million.

Yesterday evening (21 January), Mapletree Logistics Trust (MLT) reported its financial results for the 3rd quarter, as well as for the first 9 months of the financial year 2024/25 ending 31 March 2025. In case you're wondering, Mapletree Industrial Trust will be reporting its results later this evening (22 January), with Mapletree Pan Asia Commercial Trust doing so tomorrow evening (23 January).

Before I begin, one main concern I have about the REIT is the weakness in its China properties – where its rental reversions have further weakened from -11.3% in the 1st quarter to -12.2% in the 2nd quarter (and personally, this will have a negative impact on the REIT's financial performances to a certain extent in the coming quarters ahead), so its something I'm focused on in my review of the REIT's latest results in this post.

Above and beyond, you'll also read about my review of MLT's latest financial results, portfolio occupancy and debt profile, as well as its distribution payouts to unitholders:

Financial Performance (3Q FY2023/24 vs. 3Q FY2024/25, and 9M FY2023/24 vs. 9M FY2024/25)

In this section, you'll find a review of MLT's financial performances for the 3rd quarter, and then for the first 9 months of FY2024/25, compared against that reported in the corresponding periods last year:

3Q FY2023/24 vs. 3Q FY2024/25:

3Q FY2023/243Q FY2024/25% Variance
Gross Revenue
(S$’mil)
$184.0m$182.4m-0.9%
Property Operating
Expenses (S$’mil)
$24.5m$25.2m+2.9%
Net Property
Income (S$’mil)
$159.5m$157.2m-1.4%
Distributable Income
to Unitholders (S$’mil)
$112.2m$101.3m-9.7%

My Observations: As expected, it was a weaker set of results reported by MLT – in terms of the percentage decline for the quarter, it is pretty much as the previous 2 quarters, where its gross revenue and net property income fell by a low single-digit percentage, and distributable income to unitholders by a high single-digit percentage.

MLT's gross revenue dipped by 0.9% year on year to S$182.4 million as a result of lower contribution from existing properties (mainly from China), absence of revenue contribution from divested properties, and a weaker South Korean Won, Hong Kong Dollar, as well as Japanese Yen against the Singapore Dollar.

As a result of a 2.9% year on year increase in property operating expenses to S$25.2 million from higher utility expenses, property-related taxes, and contribution from acquisitions completed in 1Q FY2024/25 and 4Q FY2023/24, its net property income recorded a 1.4% year-on-year decline to S$157.2 million.

Finally, MLT's distribution payout to unitholders fell by 9.7% to S$101.3 million due to higher borrowing costs (which spiked by 8.7% year on year to S$39.9 million), lower divestment gain (of S$7.5 million, compared to S$12.4 million in the same time period last year).

9M FY2023/24 vs. 9M FY2024/25:

9M FY2023/249M FY2024/25% Variance
Gross Revenue
(S$’mil)
$552.9m$547.4m-1.0%
Property Operating
Expenses (S$’mil)
$73.3m$74.9m+2.2%
Net Property
Income (S$’mil)
$479.6m$472.5m-1.5%
Distributable Income
to Unitholders (S$’mil)
$336.7m$307.3m-8.7%

My Observations: For the first 9 months of FY2024/25, MLT's gross revenue, net property income, and distributable income to unitholders fell by a single-digit percentage compared to the same time period a year ago.

Gross revenue was 1.0% lower year on year at S$547.4 million, due to lower contribution from existing properties (mainly in China), absence of revenue contribution from divested properties, and a weaker Japanese Yen, South Korean Won, Chinese Yuan, and Vietnamese Dong against a strong Singapore Dollar.

Property operating expenses went up by 2.2% year on year to S$74.9 million, mainly due to contribution from acquisitions completed in 1Q FY2024/25 and FY2023/24, along with higher utilities expenses and property-related taxes. This led to its net property income recording a 1.5% year on year decline at S$472.5 million.

Finally, due to a 8.8% year-on-year increase in borrowing costs due to higher average interest rate on existing debts, incremental borrowings to fund acquisitions made in 1Q FY2024/25 and FY2023/25, MLT's distributable income to unitholders fell by 8.7% year on year to S$307.3 million.

Portfolio Occupancy Profile (2Q FY2024/25 vs. 3Q FY2024/25)

As mentioned earlier in this post, one main concern I have about the REIT is the weakness of its China properties (where its rental reversions since the 1st quarter of FY2024/25 have not only deteriorated, but they are also in negative double-digit percentages).

Has the situation improved in the current quarter under review? Let us find out in this section, where you will find a review of MLT's portfolio occupancy profile reported for the current quarter under review (i.e., 3Q FY2024/25 ended 31 December 2024) compared against that reported in the previous 3 months ago (i.e, 2Q FY2024/25 ended 30 September 2024):

2Q FY2024/253Q FY2024/25
Portfolio Occupancy
(%)
96.0%96.3%
Rental Reversion
(%)
-0.6%+3.4%
Portfolio WALE
(years)
2.8 years2.7 years

My Observations: Compared to the previous quarter, MLT's portfolio occupancy profile have improved – particularly in its rental reversion (inclusive of rental reversions for its China properties), where it reversed into a positive percentage.

The 0.3 percentage point (pp) improvement in its portfolio occupancy to 96.3% was driven by higher occupancy rates in its properties in Singapore (up from 95.9% in 2Q FY2024/25 to 96.3% in 3Q FY2024/25), South Korea (up from 96.1% in 2Q FY2024/25 to 96.9% in 3Q FY2024/25), and China (up from 93.1% in 2Q FY2024/25 to 93.5% in 3Q FY2024/25 – as a result of short-term leases associated with the Double 11 shopping festival).

In terms of rental reversions, I noted some improvements for its China properties, even though they were still in negative percentages – from -12.2% in 2Q FY2023/24 to -10.2% in 3Q FY2023/24. Another thing to point out from its update is that the leasing environment in the country continues to remain challenging, with negative rental reversions expected to continue. I will continue to keep a close tab on it in the coming quarters ahead.

Apart from China, rental reversions for all the other geographical locations which MLT has properties in are all positive – and on the whole, if rental reversions from China is excluded, it is at +5.4% – an improvement from +3.6% in the previous quarter. If you include the rental reversions from China, it is at +3.4%, which is also an improvement from the -0.6% recorded in the previous quarter.

Lease expiries are also well spread-out – in the final quarter of FY2024/25, there are 8.1% of leases due for renewal, with 31.9% of leases due for renewal in FY2025/26, 23.1% of leases due for renewal in FY2026/27, and 36.9% of leases due for renewal in FY2027/28 or later.

Finally, the REIT's top 10 tenants contributed approximately 21.1% towards its total gross revenue, with its top tenant (in Equinix) contributing 3.6%, and no other tenants contribute more than this percentage.

Debt Profile (2Q FY2024/25 vs. 3Q FY2024/25)

One of the things I like about MLT is its healthy debt profile – with its aggregate leverage maintained at around the 30+% to 40% mark, as well as more than 80% of its borrowings hedged at fixed rates (which helped to mitigate against the risk of rising interest rate environment a couple of years back).

Just like how I have reviewed the REIT's portfolio occupancy profile in the previous section, I'll also be reviewing its debt profile by comparing the statistics reported for the current quarter under review against that reported 3 months ago to find out if it has continued to remain in a healthy position:

2Q FY2024/253Q FY2024/25
Aggregate Leverage
(%)
40.2%40.3%
Interest Coverage
Ratio (times)
3.5x3.4x
Average Term to Debt
Maturity (years)
3.6 years3.5 years
Average Cost of
Debt (%)
2.7%2.7%
% of Borrowings Hedged
to Fixed Rates (%)
84%82%

My Observations: MLT's debt profile remained stable compared to the previous quarter.

Aggregate leverage inched up by 0.1pp to 40.3% (which is still at a healthy level) from an increase in total debt outstanding due to additional loans drawn to fund asset enhancement initiatives.

As far as debt maturity is concerned, it does not have any borrowings due for refinancing in the final quarter of FY2024/25. Between FY2025/26 and FY2029/30 (a period of 5 financial years), it has an average of 16.6% of borrowings due for refinancing every year, which I consider to be very well-staggered. The remaining 17% of borrowings will be due for refinancing only in FY2030/31 or later.

Distribution Payout to Unitholders

Another aspect I like about MLT is its quarterly distribution payout frequency, which gives me a more stable stream of income.

With that in mind, the following table is MLT's distribution payout for the 3rd quarter of FY2024/25 compared against the same time period last year:

3Q FY2023/243Q FY2024/25% Variance
Distribution Per
Unit (S$’cents)
2.253 cents2.003 cents-11.1%

The decline in its distribution per unit can be attributed to a lower distribution payout to unitholders, as well as an enlarged unit base.

Unlike the previous quarters, the distribution reinvestment plan is suspended this time round – meaning you will receive your distributions in cash only.

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

Ex-Date: 28 January 2025
Record Date: 31 January 2025
Payout Date: 13 March 2025

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

"Through active lease and asset management, we have successfully renewed or replaced the majority of the leases expiring this year. Portfolio occupancy improved to 96.3% with positive rental reversions of 3.4% achieved this quarter. As we navigate through an increasingly uncertain macroeconomic environment, we remain focused on maintaining stability in the portfolio, while staying agile and proactive to adapt to evolving market conditions. We will continue to drive our rejuvenation strategy to strengthen MLT's resilience."

Closing Thoughts

Personally, the biggest positive from MLT's latest results was the improvement in its China properties, where the occupancy was up by 0.4pp from 93.1% in 2Q FY2024/25 to 93.5% in 3Q FY2024/25, as a result of short-term leases associated with the Double 11 shopping festival. Rental reversions, though still in negative percentages, improved from -12.2% in 2Q FY2024/25 to -10.2% in 3Q FY2024/25 – however, I note from the report that negative rental reversions are expected to continue as the rental situation in China remains challenging. I will continue to keep a close watch on these 2 statistics in the coming quarters.

Apart from that, everything was pretty much within my expectations – the single-digit percentage decline in its financial performance (particularly in its gross revenue and net property income) for the 3rd quarter as well as for the first 9 months of FY2024/25, and its healthy debt profile (where aggregate leverage remained at about 40%, with slightly more than 80% of borrowings hedged at fixed rates).

With that, I have come to the end of my review of MLT's latest 3Q and 9M FY2024/25 results. Do note that all the opinions expressed within are purely mine which I'm sharing for educational purposes only. They do not imply any buy or sell calls for the REIT's units. You should always do your own due diligence before you make any investment decisions.

Related Documents

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

The post Mapletree Logistics Trust's 3Q & 9M FY2024/25 Results Review first appeared on The Singaporean Investor.

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