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Mapletree Logistics Trust’s Latest Earnings: Distribution Holds Steady, But Challenges Remain

Credit: Axisadman

Yesterday evening, Mapletree Logistics Trust  (SGX: M44U) released its second-quarter earnings report for its financial year ending 31 March 2017 (FY16/17). The reporting period was from 1 July 2015 to 30 September 2015.

Mapletree Logistics Trust is a real estate investment trust (REIT) that owns 124 logistics properties around Asia and Australia. You can learn more about the REIT in here and here, or catch the results from its previous quarter here.

Financial highlights

The following’s a quick rundown on some of the latest financial figures for Mapletree Logistics Trust:

  1. Gross revenue rose to S$91.6 million in the latest quarter, up 4.7% from the same quarter a year ago. Drivers behind the rise in revenue include contribution from acquisitions and higher revenue from existing assets.
  2. Net property income (NPI) rose by 5.3% year-on-year. NPI for the reporting quarter came in at S$76.8 million, compared to the S$73 million recorded for the second-quarter in the last fiscal year.
  3. Distribution per unit (DPU) for the quarter was 1.86 cents, unchanged from a year ago.
  4. The REIT’s investment properties are valued at nearly S$5.33 billion as of 30 September 2016. It reported an adjusted net asset value per unit of $0.99 for the reporting quarter, down slightly from S$1.00 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 the REIT is funded and its sensitivity to the interest rate environment. These are summarized for Mapletree Logistics Trust below:

2016-10-24-mapletree-logistics-trust-debt-table
Source: Mapletree Logistics’ earnings presentations

Over the past year, Mapletree Logistics Trust’s gearing had decreased marginally to 37.6% despite a slight increase in debt from S$2 billion to S$2.05 billion. But, the REIT’s interest cover had dropped from 6.8 to 5.7.

Meanwhile, the REIT’s debt maturity profile is well spread-out – there’s no fiscal year where more than 17% of its total debt needs to be refinanced.

Operational highlights

Mapletree Logistics Trust ended the reporting quarter with an overall portfolio occupancy rate of 96.4%, down slightly from 96.9% a year ago. The REIT also reported a weighted average lease term to expiry of about 4.1 years (by nett lettable area), unchanged from the second-quarter of the previous fiscal year.

On the REIT’s future, Ng Kiat, chief executive of the REIT’s manager, had this statement to add:

“MLT [Mapletree Logistics Trust] continues to deliver steady operating performance in 1H FY16/17, underpinned by the portfolio’s resilience and our firm focus on managing lease expiries and tenant retention.

During the period, we also completed three acquisitions for approximately S$161 million, thus strengthening MLT’s presence in the prime logistics hubs of Sydney, Shah Alam and Binh Duong. With initial NPI yields of 7.1% to 9.9%, they will contribute to MLT’s DPU in future quarters.”

Around 31% of Mapletree Logistics Trust’s leases were due for renewal in FY16/17. But, around two-thirds of the leases have already been renewed or replaced. In the earnings release, the REIT noted that there are some challenges in the leasing environment, however:

“[T]he leasing environment for MLT’s portfolio is challenging especially for several single user assets. Subdued global economic conditions have continued to weigh on business and consumer sentiment.

Looking ahead, the Manager will continue to seek investment and asset enhancement opportunities that deliver long-term value. At the same time, the Manager will maintain focus on asset management and lease renewals/replacements to manage portfolio returns.”

Mapletree Logistics Trust closed at a unit price of $1.05 on Monday. This translates to a historical price-to-book ratio of 1.05 and a trailing distribution yield of 7%.

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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 units in Mapletree Logistics Trust.