Mapletree Logistics Trust’s Latest Earnings: Running to Standstill

Credit: Axisadman

Yesterday, Mapletree Logistics Trust  (SGX: M44U) released its third quarter earnings report for its financial year ending 31 March 2017 (FY16/17). The reporting period is from 1 October 2016 to 31 December 2016.

As a quick background, Mapletree Logistics Trust is a real estate investment trust (REIT) that owns 128 logistics properties around Asia and Australia. You can learn more about the REIT in here and here, or catch up with the results from its previous quarter here.

Financial highlights

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

  1. Gross revenue rose 7.4% year-on-year to S$95.5 million in the reporting quarter.
  2. Net property income (NPI) climbed by 7.7% to S$79.9 million.
  3. Distribution per unit (DPU) for the reporting quarter was 1.87 cents, unchanged from a year ago. Investors should note that the reporting quarter’s DPU includes a divestment gain from the sale of the 20 Tampines Street 92 property. The distribution of the divestment gain first started on the quarter ended 31 December 2015 and will last for a total of eight quarters.
  4. The REIT’s investment properties are valued at S$5.5 billion as of 31 December 2016. It ended its reporting quarter with an adjusted net asset value per unit of S$1.01, up slightly from the S$1.00 seen a year ago.

Beyond these, Foolish investors may 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 summarised for Mapletree Logistics Trust below:

2017-01-23 Mapletree Logistics Trust Debt Table
Source: Mapletree Logistics Trust’s earnings presentations

There have been some changes to Mapletree Logistics Trust’s debt profile over the past year.

Negative changes include a slight increase in total debt, the lower interest cover ratio, and a decline in the percentage of borrowings that are hedged or on fixed rates. On the positive side are the lower leverage ratio and average interest rate.

During the reporting quarter, two loans worth S$125 million each were taken up as part of Mapletree Logistics Trust’s efforts to refinance existing loans. The outstanding loans for FY16/17 is minimal at just 3% of overall debt. But as always, Foolish investors should keep a watchful eye on the progress of the REIT in refinancing its debt.

Operational highlights and a future outlook

Mapletree Logistics Trust ended the reporting quarter with an overall portfolio occupancy rate of 96.1%, down slightly from the 96.4% seen a quarter before and the 96.9% seen a year ago.

The REIT also had a weighted average lease term to expiry of about 4.1 years (by nett lettable area) for the reporting quarter.

Ng Kiat, the chief executive of Mapletree Logistics Trust’s manager, shared the following comments on the REIT’s performance in the earnings release:

“MLT’s [Mapletree Logistics Trust] portfolio has continued to deliver a stable DPU for the third quarter and nine months ended 31 December 2016 despite the challenging leasing environment.

On the investment front, we have expanded our presence in Australia with the recent acquisition of four quality assets in the state of Victoria for A$142 million. With an initial average NPI yield of 7.6% and a WALE of 6.4 years, they will contribute a stable, growing income stream to MLT in future quarters.”

Regarding the REIT’s outlook, management continues to be cautious, judging from the following statement::

“Given the uncertain economic outlook, the leasing environment remains challenging with continued pressure on occupancy and rental rates.Nevertheless, MLT’s diversified portfolio, large tenant base and well-staggered lease expiry profile should provide resilience to the portfolio.”

Mapletree Logistics Trust’s units last traded at $1.06 each on Monday. This translates to a historical price-to-book ratio of 1.03 and a distribution yield of around 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.