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Mapletree Logistic Trust’s Latest Earnings: What’s Next After A Fall In Distributions?

Mapletree Logistics Trust  (SGX: M44U) released its fiscal first-quarter earnings report yesterday evening. The reporting period was from 1 April 2015 to 30 June 2015.

Mapletree Logistics Trust is a real estate investment trust (REIT) that owns 118 logistics properties around Asia with a diverse set of 419 tenants. You can learn more about the REIT in here and here and catch up with its previous quarter’s earnings here.

Financial highlights

The following’s a quick hit on Mapletree Logistics Trust’s latest set of financial figures:

  1. Gross revenue rose to $85.1 million in the latest quarter, up 5% from the same quarter a year ago. Among the drivers behind the rise in revenue were the contributions from acquisitions and higher revenue from existing assets. Mapletree Logistics Trust ended the reporting quarter with 118 properties in its portfolio compared to 112 properties a year ago.
  2. Along with this, net property income (NPI) rose by 3.1% year over year to $71.1 million.
  3. But that was not enough to help the REIT’s bottom-line: Mapletree Logistics Trust’s distribution per unit (DPU) for the quarter came in at 1.85 cents, a 2.6% decrease from 1.90 cents in the first-quarter last year.
  4. The REIT’s investment properties are valued at $4.6 billion as of 30 June 2015. Mapletree Logistics Trust ended the quarter with an adjusted net asset value per unit of $0.99, up 4.2% from a year ago.,

Beyond these, Foolish investors might also want to keep an eye on the REIT’s debt profile. The debt profile may provide clues on how a REIT is funded and its sensitivity to the interest rate environment. These are summarised for Mapletree Logistics Trust in the table below:

Mapletree Logistics Trust's balance sheet details (21 July 2015)

Source: Mapletree Logistics Trust’s earnings presentations

When compared to a year ago, Mapletree Logistics Trust’s financial health had weakened: Its aggregate leverage ratio had increased; its interest cover ratio had stepped down; its total borrowings had grown; and the cost of its borrowings had rose.

The real test in the flexibility of the REIT’s funding will come in the period stretching from FY 16/17 (fiscal year ending 31 March 2017) to FY 18/19; roughly 60% of Mapletree Logistics Trust’s loans will progressively become due over that timeframe.

Foolish investors should keep a watchful eye on the REIT’s progress in refinancing its debt.

Operational highlights

Mapletree Logistics Trust ended the quarter with an overall portfolio occupancy of 96.6%. The REIT also had a weighted average lease term to expiry (by nett lettable area). of about 4.1 years.

During the reporting quarter, Mapletree Logistics Trust announced three accretive acquisitions worth a collective $304 million. One acquisition had been completed during the quarter itself while one was completed in July. The final one – the REIT’s maiden acquisition in Australia – is expected to close in August.

Meanwhile, Mapletree Logistics Trust had also divested its 134 Joo Seng Road property, citing poor warehouse specifications and limited scope for redevelopment.

Looking forward, Ng Kiat, the chief executive of the REIT’s Manager, had this statement to add:

“1Q [first quarter] was an active quarter for [Mapletree Logistics Trust]. As we continue our efforts to rejuvenate and rebalance the portfolio, we have announced three accretive acquisitions of about S$304 million in growth markets, namely South Korea, Vietnam and Australia. These properties are well-located, designed with high specifications, and leased to good quality tenants with annual rental escalations. The two acquisitions in South Korea and Vietnam have been completed, while the Australian acquisition is expected to be completed by August 2015.

On the operational front, we remain very focused on asset and lease management, especially for the SUA [single-user assets] to MTB [multi-tenanted buildings] conversions. Our efforts have helped to maintain an overall stable occupancy rate of 96.6%.”

Foolish summary

Mapletree Logistics Trust last traded at S$1.15 on Monday. This translates to a historical price-to-book ratio of 1.14 and a trailing-12-months distribution yield of around 6.5%.

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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.