Mapletree Logistics Trust (SGX: M44U) is a real estate investment trust (REIT) with 137 properties located in countries such as Singapore, Malaysia, Hong Kong, Japan, and Australia. The logistics REIT announced its financial results for the first quarter ended 30 June 2019 (1Q FY19/20) yesterday. Let’s dive into the main aspects of the earnings update here.
Mapletree Logistics Trust’s gross revenue for the reporting quarter grew 13.6% year-on-year to S$119.8 million and net property income increased by 18.2% to S$106.1 million. The better showing was due to a stable performance from existing properties and contributions from the redeveloped Mapletree Ouluo Logistics Park Phase 1 in Shanghai, China. Accretive acquisitions in Singapore, Australia, South Korea and Vietnam that were completed in FY18/19 also contributed to gross revenue.
Meanwhile, the amount distributable to unitholders climbed 20.8% to S$73.6 million. But distribution per unit (DPU) grew by a smaller amount at 3.5% to 2.025 Singapore cents due to a higher outstanding unit count.
In terms of balance sheet strength, as of 30 June 2019, the REIT’s interest coverage ratio was stable at 4.9 times while its gearing ratio decreased to 36.8%, well below the regulatory limit of 45%. Mapletree Logistics Trust has plenty of room to gear up for acquisitions if the opportunity arises.
Net asset value (NAV) per unit was flat at S$1.17.
Where art thou?
The following chart shows Mapletree Logistics Trust’s occupancy rate:
Source: Mapletree Logistics Trust 1Q FY19/20 earnings presentation
Even though the REIT’s overall portfolio occupancy rate fell from 98.0% at end-March 2019 to 97.6%, as of 30 June 2019, the occupancy rate is still very healthy. The assets in Japan, Australia, Malaysia and Vietnam continued to maintain 100% occupancy.
The portfolio’s weighted average lease expiry (by NLA) was 4.8 years, as of end-June 2019, an improvement from 3.8 years a quarter ago.
Peeking into the future
In the first half of 2019, global economic growth softened further with the slowing down of trade and manufacturing. Mapletree Logistics Trust’s manager said that in its markets, overall leasing demand for warehouse space has been relatively resilient to-date, but clients “have become more cautious on renewals and capacity expansion”.
Over the longer term, I believe that Mapletree Logistics Trust can continue delivering the goods, just like how it has done in the past. At its current unit price of S$1.61, it is selling at a price-to-book ratio of 1.4 and a distribution yield of 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. The Motley Fool Singapore has recommended units of Mapletree Logistics Trust. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.