Mapletree Logistics Trust (SGX: M44U), or MLT, is the first Asia-focused real estate investment trust (REIT) that was listed in July 2005. As of 30 June 2019, it has a portfolio of 137 logistics assets in countries such as Singapore, Hong Kong, China and Japan, with total assets under management of S$7.9 billion. MLT is managed by Mapletree Logistics Trust Management Pte Ltd, a wholly-owned subsidiary of Mapletree Investments Pte Ltd.
MLT has the advantage of being one of the first industrial REITs to be listed in Singapore and also has a strong sponsor and manager in Mapletree Investments. Here are three other reasons why I like this REIT.
1. Active portfolio management
During the fiscal year 2019 (ended 31 March 2019), MLT acquired a total of 19 modern specifications logistics facilities in China (with a 50% interest in 11 properties), Singapore, Australia, South Korea and Vietnam with a total value of S$1.2 billion. These acquisitions were carried out in mid to late-2018 and boosted the value of the portfolio from S$6.5 billion to S$8 billion (the difference of S$300,000 is the appreciation in the value of properties in Hong Kong).
The manager divested two properties in Singapore for S$90.4 million, and post-year-end also divested five properties in Japan for around S$213.3 million (netting a divestment gain of around S$8.5 million).
Such active portfolio management by the REIT manager is a big positive for me, as it demonstrates the manager’s willingness to recycle the capital from old, under-performing assets into new, better-performing ones.
2. High occupancy levels
Source: MLT Presentation Slides Q1 2020
MLT’s portfolio enjoys very high occupancy levels, with an overall portfolio occupancy of 97.6%, as of 30 June 2019. This was a slight drop from last quarter’s 98.0% and was mainly due to the decrease in occupancy rate for the South Korean and Hong Kong portfolios.
The occupancy rate is also very high on a country basis, as evidenced by each country’s occupancy rate exceeding 95%. This high figure implies that MLT’s assets have stable tenants and this provides clear visibility with regards to rental revenue.
3. Geographically-diversified asset base
Source: MLT Presentation Slides FY 2019
MLT’s asset base is geographically diversified, as seen from the chart above. While Singapore and Hong Kong form the bulk of the portfolio (total: 64.4% of asset value), the portfolio also has exposure to strong growth markets such as China, South Korea and Vietnam. This diversification allows MLT to capture pockets of growth from different countries within Asia and also buffers the portfolio in case any one country encounters a crisis.
Steady, consistent growth
MLT has all the right ingredients for an investment – stable, consistent growth in distribution per unit, a strong sponsor and manager, a well-diversified portfolio of properties and a strong track record of savvy capital recycling. Unitholders can look forward to many more good years with MLT in their portfolios.
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The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. The Motley Fool Singapore has recommended shares of Mapletree Logistics Trust. Motley Fool Singapore contributor Royston Yang does not own shares in any of the companies mentioned.