Following the end of the financial year 2020/21 on 31 March 2021, blue-chip REIT Mapletree Logistics Trust (SGX:M44U), with 163 properties in its portfolio (52 of them located in Singapore, 9 in Hong Kong, 30 in China, 18 in Japan, 18 in South Korea, 12 in Australia, 15 in Malaysia, 7 in Vietnam, and 2 in India) released its latest annual report, along with notice of its upcoming annual general meeting (AGM) early this morning.

As a unitholder of the REIT, I have studied through the report and, for the benefit of those who do not have the time to go through it, in today’s post, you will find notes (of salient points) I have taken, details of its upcoming AGM (which I have already registered to attend), as well as my personal thoughts about the REIT’s prospects ahead to share…

Message from the Chairman Mr Lee Chong Kwee, and CEO Ms Ng Kiat

Navigating through the Covid-19 Pandemic:

  • Apart from remote working, safe distancing measures were also rolled out across their workplaces and facilities. Additionally, the REIT also worked closely with its tenants to provide target support where needed.
  • On the whole, the logistics industry have remained resilient, with a majority of the REIT’s tenants able to operate even during the two-month ‘circuit breaker’ period (as they were engaged in providing essential services.) Only a small portion of tenants saw their normal business operations being affected, to which the REIT provided various support and relief measures, including rental rebates, deferrals, and other flexible leasing solutions to help them through the challenging period.
  • Despite the challenging environment brought upon by the pandemic, leasing demand for quality and well-located warehouse space held firm, buttressed by resilient demand for the consumer staple and healthcare sectors, along with robust e-commerce growth.

FY2020/21 Performance:

  • Gross revenue increased 14.3% on a year-on-year (y-o-y) basis to S$561.1m (FY2019/20: S$490.8m), while net property income went up by 13.8% in the same time period to S$499.1m (FY2019/20: S$438.5,) due to higher revenue contribution from the accretive acquisitions completed over the past 24 months, as well as maiden contribution from Mapletree Ouluo Logistics Park Phase 2 redevelopment (completed in May 2020.) However, this was partially offset by rental rebates granted to tenants impacted by the Covid-19 pandemic, along with the absence of contributions from the 6 properties divested in FY2019/20.
  • In terms of gross revenue contribution from FY202/21 by geographical locations, it is as follows (with its percentage contribution in brackets) – Singapore (33.5%), Hong Kong (21.4%), Japan (12.0%), China (10.1%), Australia (7.5%), Malaysia (6.4%), South Korea (5.9%), and Vietnam (3.2%).
  • Distributable income to unitholders saw a 10.4% y-o-y increase to S$333.1m (FY2019/20: S$301.7m), with its distribution per unit up by 2.3% compared to last year to 8.326 cents/unit (FY2019/20: 8.142 cents/unit).
  • The REIT’s portfolio occupancy rate was sustained at above 95% across all 9 geographical markets, and the weighted average term to lease expiry at approximately 3.6 years, with 24.5% of the REIT’s leases by gross revenue due for expiry in the financial year 2021/22 ahead.
  • Looking at its debt profile, the logistics REIT’s aggregate leverage as at 31 March 2021 was 38.4%, with its average term to debt maturity at 3.8 years, with S$161m (or 4%) of its total debt due for refinancing in FY2021/22. Additionally, the REIT has almost S$700m in available credit facilities, and 75% of its debt hedged into fixed rates.

Acquisitions:

  • In March 2021, the REIT completed the acquisition of 18 modern logistics properties in Australia, China, Japan, India, Malaysia, South Korea, and Vietnam. This was on top of the acquisition of the remaining 50.0% interest in 15 logistics properties in China in December 2020.
  • This acquisition deepened the REIT’s footprint in 6 existing markets, while establishing presence in a new geographical location in India.
  • On top of that, the acquisition also sees the REIT adding new quality customers and end-users including Decathlon and Coupang (the largest online marketplace in South Korea), as well as expanding the REIT’s relationships with e-commerce giants JD.com Inc. and Cainiao – both of them are now ranked as the REIT’s top 10 customers by gross revenue contribution.

Outlook Ahead:

  • While the International Monetary Fund (IMF) forecasts Asia Pacific economies to rebound sharply with a 7.6% growth in 2021, there remains a high degree of uncertainty over the pace of economic recovery, especially in view of recent resurgence in infections and new Covid-19 mutations.
  • Regardless, the management is positive on the long-term outlook for the logistics market in Asia Pacific, as Covid-19 has accelerated several pre-existing structural trends that have and will likely benefit the logistics sector.
  • Accelerated adoption of e-commerce continues to underpin demand for the REIT’s logistics facilities, especially in markets were quality assets are scarce.
  • Also, the signing of the Regional Comprehensive Economic Partnership (RCEP) – the largest free trade agreement in history, uniting 15 countries with more than 2.2 billion people and covering 30% of global trade – will benefit the REIT (as it is in 7 of the 9 markets covered under the agreement) as it is expected to boost trade and increase demand for modern logistics and warehousing space.

Top 10 Tenants (by Gross Revenue) in FY2020/21

The following table highlights who the REIT’s top 10 tenants are (in terms of their contribution to its overall gross revenue). You can see that, apart from CWT, no one single tenant contributed more than 3.5% towards the REIT’s gross revenue:

Tenant% Contribution
1.CWT7.2%
2.Coles Group3.4%
3.Equinix3.3%
4.JD.com Inc.2.4%
5.Cainiao1.9%
6.Woolworths1.8%
7.XPO Worldwide Logistics1.5%
8.adidas Hong Kong Limited1.4%
9.TE Logics Co., Ltd1.4%
10.Nippon Access Group1.4%

Details of Mapletree Logistics Trust’s Upcoming AGM

Mapletree Logistics Trust will be holding its AGM on Tuesday, 13 July 2021, at 2.30pm.

Due to the current safe distancing measures in place, the coming AGM will be held virtually, and you can sign up to attend the meeting here (the deadline to do so will be on Saturday, 10 July 2021, at 2.30pm), along with submitting any questions you may have for the REIT’s management.

As a unitholder, I have signed up to attend the meeting (and as usual, I will be posting a summary of it in due course), along with submitting the following question to the REIT’s management:

“I understand from the REIT’s fourth quarter and full-year results release that, as a result of the inclusion of property expenses for the newly acquired properties in FY2019/20 as well as in FY2020/21, along with the recognition of allowance for doubtful receivables, the property expenses for Q4 FY2020/21 was up by 52.6% compared to the same time period last year. Is it possible for the REIT to provide the figures on the amount recognised for the allowance of doubtful receivables, and the additional expenses incurred by the newly acquired properties?”

Closing Thoughts

With the proliferation of e-commerce, I am of the opinion that demand for warehousing space will only increase, with the blue-chip logistics REIT standing to benefit from this.

Also, as there still remains some debt headroom for the REIT to make further yield accretive acquisitions as and when an opportunity becomes available, I am optimistic of the REIT’s management’s ability to grow the REIT further in the years ahead.

Related Documents

Disclaimer: At the time of writing, I am a unitholder of Mapletree Logistics Trust.

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