What Investors Should Know about Mapletree Logistics Trust’s Latest Earnings

Mapletree Logistics Trust (SGX: M44U) released its third quarter earnings report yesterday (19 January 2015). The reporting period was from 1 October 2014 to 31 December 2014. Mapletree Logistics Trust is a real estate investment trust (REIT) that owns 117 logistics properties around Asia with diverse set of 408 tenants. You can catch the previous quarter earnings here.

Financial Highlights

Here’s a rundown on the financial figures:

  1. Gross revenue rose to $82.9 million in the latest quarter, up 6.2% from the quarter a year ago. Among the drivers behind the rise in revenue was the contribution from Mapletree Benoi Logistics Hub, four acquisitions made during the quarter and higher revenue from existing assets in Hong Kong and Korea.
  2. Net property income (NPI) rose by 3.1%. NPI came in at $69.5 million, compared to $67.4 million for the same quarter a year ago.
  3. Distribution per unit (DPU) for the quarter will be 1.87 cents, a 1.6% increase from 1.84 cents in the third quarter last year. The REIT has distributed 5.65 cents per unit for the first nine months of the financial year which began on 1 April 2014 (FY 2014/2015).
  4. The total portfolio value stands at $4.4 billion, with an adjusted net asset value per unit of $0.96.

Foolish investors might want to keep up an eye with the REIT’s debt profile. The debt profile may provide clues on how the REIT is funded, and its sensitivity to the interest rate environment. This is summarized below.

Aggregate Leverage Ratio 34.70%
Interest Cover Ratio 7.9 times
Weighted Average Debt Maturity 3.1 years
Hedged / Fixed Rate borrowings 76%
Weighted Average Annualised Interest Rate 2.10%
Total Borrowings $1.6 billion

Source: REIT earnings presentation

For the quarter, the REIT managed to refinance $45m in loans due in the financial year 2014/2015. At the same time, Mapletree Logistics also took on additional borrowings of $150 million to finance the four acquisitions made for the third quarter of the FY 2014/2015.

The real test in flexibility of funding will come in the FY 2016/2017 to FY 2018/2019, when about 59% of its loans progressively become due. The progress in refinancing of debt is where Foolish investors should keep a watchful eye.

Operational Highlights

Mapletree Logistics ended the quarter with an overall 96.9% portfolio occupancy. The REIT also had an weighted average lease term to expiry of about 4.4 years. Looking forward, Ms Ng Kiat, Chief Executive Officer of the Manager had this statement to add:

We maintain absolute focus on active lease and asset management. Through intensified marketing and leasing efforts, we have renewed/replaced approximately 94% of leases due for expiry in 3Q [third quarter] at an average positive rental reversion of 9%. However, Singapore operations will remain challenging, with more conversions of single-tenanted buildings to multi-tenanted buildings expected over the next 12 months.

On the investment front, we added four quality assets in 3Q [third quarter] as part of our ongoing efforts to rebalance MLT’s [Mapletree Logistics Trust] portfolio to higher growth markets. This brings the total number of acquisitions to six this year, with a combined value of approximately S$209 million. In line with our capital recycling strategy, we also announced the planned divestment of 134 Joo Seng in Singapore. The transaction is still pending the execution of a sale and purchase agreement and regulatory approvals. Any divestment gain realised from this transaction will be distributed to Unitholders.”

Foolish summary

Mapletree Logistics Trust last traded at S$1.23 on Monday. This translates to a historical price-to-book ratio of 1.28 and a distribution yield of around 6.1%.

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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 Chin Hui Leong owns shares in Mapletree Logistics Trust.