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Distributions Increase At MapleTree Logistics Trust

mapletree logisticsMapleTree Logistics Trust’s (SGX: M44U) second-quarter earnings release saw a 0.6% decline in quarterly gross revenue to S$77.1m compared to a year ago. As a result, the Real Estate Investment Trust’s (REIT) net property income was down by 1.3% year-on-year to S$66.6m.

It was not all bad news though, as distributions went up 7.5% to S$44.5m, while distributions per unit (DPU) increased by 6.4% to 1.82 cents.

The REIT specialises in logistics-related properties in six Asian regions that include Singapore, Japan, China, and Hong Kong. There are 111 properties in its portfolio.

The year-on-year growth in distributions as well as DPU was thanks to a larger portfolio of properties; an increase in rents from existing assets and cheaper debt.

However, gross revenue and net property income were lower due to a weaker Japanese Yen. If forex impacts were stripped away, the gross revenues would have grown 4% year-on-year to S$80.3m, while net property income would have risen 3% to S$69.8m.

MLT had hedged its Japanese income streams substantially in the quarter, so the impact of a declining yen on the results was cushioned.

The REIT had experienced positive rental reversions of 24% (where rents are adjusted to current market conditions, either on expiry or on predetermined dates) in the quarter. In addition, its portfolio occupancy had remained high at 98.7% across its properties.

As REITs are generally highly leveraged entities, investors should always keep an eye on their balance sheets. On that front, MLT’s balance sheet had improved compared to a year ago.

Its aggregate leverage ratio had moderated from 37% to 34.4% with total debt down from S$1.6b to S$1.48b. The weighted average interest on its loans declined from 2.4% to 1.9% and the interest cover ratio improved from 6.3 times to 8.6 times.

The REIT has also converted about 74% of its total debt into fixed rates loans. Additionally, it has a staggered debt maturity profile as shown below, which should help to reduce financial risks for investors.

Maturity   Date % of   Total Debt Load of S$1.48b
FY 2013/2014 12%
FY 2014/2015 11%
FY 2015/2016 8%
FY 2016/2017 17%
FY 2017/2018 11%
FY 2018/2019 19%
FY 2019/2020 11%
FY 2020/2021 3%
FY 2021/2022 8%

Source: MapleTree Logistics Trust’s Earnings Presentation

MapleTree Logistics said: “[We] will continue to focus on yield optimisation via active lease and asset management. Where appropriate, the manager will implement asset enhancement or redevelopment initiatives to unlock value from the existing portfolio.”

The REIT is still seeing stable demand for logistics facilities in the Asian markets that it is operating in despite a less-than-stellar global economic recovery.

At S$1.075, units of MLT are valued at 1.2 times book value and carry a distribution yield of 6.7% based on its annualised pay-out for the six months ended 30 Sep.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chong Ser Jing doesn’t own shares in any companies mentioned.