Mapletree Logistics Trust (SGX:M44U), whose portfolio comprises of 185 real estate properties used for logistics purposes in Singapore, Australia, China, Hong Kong, India, Japan, Malaysia, South Korea, and Vietnam, with a total assets under management of S$12.8 billion, is the last of the trio of Mapletree REITs to have made available its results for the fourth quarter and full-year ended 31 March (i.e. FY2022/23) yesterday morning (01 May 2023.)

For those of you who have missed out my reviews of the other 2 Mapletree REITs when they were published earlier, you can find them via the respective links below:

In this post, you’ll find my review of the logistics REIT’s latest financial performance, portfolio occupancy and debt profile, along with its distribution payout to unitholders declared for the current quarter under review.

Let’s begin:

Financial Results (Q4 FY2021/22 vs. Q4 FY2022/23, and FY2021/22 vs. FY2022/23)

In this section, I will first be looking at the REIT’s results for the 4th quarter of FY2022/23 compared against the same time period last year (i.e. Q4 FY2021/22), followed by looking at its results for the full year (i.e. FY2021/22 vs. FY2022/23):

Q4 FY2021/22 vs. Q4 FY2022/23:

Q4 FY2021/22Q4 FY2022/23% Variance
Gross Revenue
(S$’mil)		$182.9m$178.9m-2.2%
Property Operating
Expenses (S$’mil)		$25.8m$24.6m-4.7%
Net Property
Income (S$’mil)		$157.1m$154.3m-1.8%
Distributable Income
to Unitholders
(S$’mil)		$108.0m$109.2m+1.1%

My Observations: Not the best of results I must say, where both its gross revenue and net property income saw slight declines (of 2.2% and 1.8% respectively) due to the depreciation of the Chinese Renminbi, Japanese Yen, South Korean Won, and Australian Dollar against the Singapore Dollar (however, the impact of currency fluctuations was partly mitigated through the use of foreign currency forward contracts to hedge the foreign-sourced income distributions.) However, this decline was moderated by full quarter contributions from acquisitions from China, South Korea, Vietnam, and Malaysia completed in Q1 FY2022/23 and in Q4 FY2021/22.

On the other hand, as a result of the depreciation of Chinese Renminbi, Japanese Yen, and South Korean Won, against the Singapore Dollar (a benefit here), property operating expenses saw a 4.7% decline (compared against the same time period last year.)

FY2021/22 vs. FY2022/23:

FY2021/22FY2022/23% Variance
Gross Revenue
(S$’mil)		$678.6m$730.6m+7.7%
Property Operating
Expenses (S$’mil)		$86.4m$95.9m+10.9%
Net Property
Income (S$’mil)		$592.1m$634.8m+7.2%
Distributable Income
to Unitholders
(S$’mil)		$390.7m$432.9m+10.8%

My Observations: On a full-year basis, however, its gross revenue and net property income still manage to eke out a single-digit percentage gain, as a result of higher revenue from existing properties, and full year contributions from acquisitions in China, South Korea, Japan, Vietnam, Malaysia, Australia, and Singapore completed in Q1 FY2022/23 and FY2021/22, moderated by the depreciation of the Japanese Yen, Chinese Renminbi, South Korean Won, and Australian Dollar against the Singapore Dollar – however, the impact of currency fluctuation was partly mitigated through the use of foreign currency forward contracts to hedge the foreign-sourced income distributions.

The logistics REIT’s property operating expense went up by 10.9% as result of expenses incurred by the newly acquired properties completed in Q1 FY2022/23 and FY2021/22.

Portfolio Occupancy Profile (Q3 FY2022/23 vs. Q4 FY2022/23)

Moving on, let us take a look at the logistics REIT’s portfolio occupancy profile in the table below – where you’ll find a comparison of the statistics recorded for the current quarter under review (i.e. Q4 FY2022/23 ended 31 March 2023), against that recorded in the previous quarter 3 months ago (i.e. Q3 FY2022/23 ended 31 December 2022), to find out if it has continued to remain resilient:

Q3 FY2022/23Q4 FY2022/23
Portfolio Occupancy
(%)		96.9%97.0%
Rental Reversion
(%)		+2.9%+3.1%
Portfolio WALE
(by NLA – years)		3.2 years3.1 years

My Observations: Portfolio occupancy profile, when compared against the last quarter 3 months ago, continues to remain very strong – with its portfolio occupancy rate climbing up slightly to 97.0%, as a result of slight improvements seen in the occupancy rates of its properties in Singapore (up from 98.3% in Q3 FY2022/23 to 98.4% in Q4 FY2022/23), Japan (up from 99.2% in Q3 FY2022/23 to 100.0% in Q4 FY2022/23), as well as in China (up from 93.3% in Q3 FY2022/23 to 93.4% in Q4 FY2022/23.)

Another encouraging point to note is the further improvements made in its rental reversion – which went up from a positive +2.9% in Q3 FY2022/23 to a positive +3.1% in Q4 FY2022/23.

In terms of revenue contribution by tenants, its top 10 tenants account for approximately 23.5% of the REIT’s total gross revenue, with no tenant contributing more than 4.4%. Tenant base is also very diversified at 887.

Finally, on its lease expiry profile, it is well-staggered over the next couple of years – with 29.2% of the leases due for renewal in the coming financial year 2023/24, 23.1% of the leases due for renewal in FY2024/25, 17.6% of the leases due for renewal in FY2025/26, and 30.1% of the leases due for renewal only in FY2026/27 or later.

Debt Profile (Q3 FY2022/23 vs. Q4 FY2022/23)

With the current high interest rate environment, making sure that a REIT’s debt profile continues to be healthy becomes all the more important.

What I will be doing here is that, I will be looking at some of the key statistics of the REIT’s debt profile recorded for the 4th quarter of FY2022/23 (ended 31 March 2023) and compare them against the previous quarter 3 months ago (i.e. the 3rd quarter of FY2022/23 ended 31 December 2022) to find out if it has continued to remain healthy:

Q3 FY2022/23Q4 FY2022/23
Aggregate Leverage
(%)		37.4%36.8%
Interest Coverage
Ratio (times)		4.3x4.0x
Average Term to
Debt Maturity (years)		3.6 years3.8 years
Average Cost
of Debt (%)		2.6%2.7%
% of Borrowings Hedged
at Fixed Rates (%)		83%84%

My Observations: Mapletree Logistics Trust’s debt profile in my opinion continues to be in a very healthy position – with its aggregate leverage below 40.0% (and as a result, having a very comfortable debt headroom before the regulatory level of 50.0% is reached), along with having a very high percentage of borrowings hedged at fixed rates, where, at 84%, is among one of the highest in all the Singapore-listed REITs.

In terms of debt maturity, only 8% (or S$374m) of borrowings are due for refinancing in the coming financial year 2023/24 (and there are S$1,161m of available committed credit facilities to refinance it, so no issue there), 11% of borrowings due for refinancing in FY2024/25, 17% of borrowings due for refinancing in FY2025/26, and 64% of borrowings due for refinancing only in FY2026/27 or later.

Distribution Payout to Unitholders

Just like the other 2 Mapletree REITs, the management of Mapletree Logistics Trust also declares a distribution payout to its unitholders on a quarterly basis (so for those who prefer to invest in REITs that pays out a distribution once every 3 months, you can have a look at these 3 Mapletree REITs.)

As a result of a private placement launched on 30 March 2023, the REIT have already declared a distribution payout of 2.268 cents/unit for the period between 01 January and 31 March 2023 (which is the same as the amount declared in the same time period last year), as well as a payout of 0.234 cents/unit for the period between 01 and 10 April 2023 – as such, the total payout this time round amounts to 2.502 cents/unit. Distribution payout have also gone ex-distribution on 06 April 2023, with payout date to be on 22 May 2023.

On a full-year basis, the REIT’s total distribution payout for FY2022/23 amounts to 9.011 cents/unit (2.268 cents/unit declared in Q1, 2.248 cents/unit declared in Q2, 2.227 cents/unit declared in Q3, and 2.268 cents/unit declared in Q4) – compared to its distribution payout of 8.787 cents/unit declared in the whole of FY2021/22, this is a small 2.5% improvement.

Comments & Outlook (from the REIT’s Press Release)

CEO Ms Ng Kiat’s Comments:

“Underpinned by our portfolio of quality assets, MLT’s performance has remained resilient and stable. However, headwinds from high borrowing costs and weakening regional currencies against Singapore Dollar will continue to impact our performance for a while. We will remain vigilant and continue to pursue our portfolio rejuvenation and recycling strategy.”

Outlook:

“The global economic outlook remains uncertain amid still-elevated inflation, high interest rates and slowing growth. MLT’s customers remain cautious on renewals and expansion, and are slower to commit. MLT’s diversified portfolio of well-located and modern facilities continues to provide resilience to its operational performance, supporting a stable occupancy of 97.0% as at 31 March 2023.

The Manager will remain proactive on managing the hedging of interest rate and foreign-sourced income to mitigate the impact of rising borrowing costs and forex volatilities on MLT’s distributions. Approximately 84% of total debt had been hedged into fixed rates and 77% of MLT’s income stream for the next 12 months had been hedged into Singapore Dollar. As at 31 March 2023, MLT’s gearing was 36.8% with an average debt duration of 3.8 years.

The Manager remains committed to its portfolio rejuvenation strategy and will continue to evaluate opportunities to divest non-core assets and redeploy capital into asset enhancements and investments with higher growth potential. The Manager will also maintain focus on optimising portfolio performance and cost management.”

Closing Thoughts

A very small disappointment in its results for the fourth quarter – but that said, impacts as a result of weaker foreign currency against the Singapore Dollar is something that is faced by REITs that have investments overseas, not just by Mapletree Logistics Trust alone. As such, I’m not too worried by it.

The REIT’s portfolio occupancy continues to remain very solid (where occupancy rates of its properties in all the geographical locations are above 95.0% – apart from China, where it was at 93.4% as at 31 March 2023.) The same can also be said for its debt profile, where it has one of the highest percentage of borrowings hedged at fixed rates among the Singapore-listed REITs. On top of that, the REIT only has about 19% of borrowings due for refinancing from now till end of FY2024/25 (which is on 31 March 2025, and I foresee interest rates to come down to more reasonable levels of around 3+% by then), which is among one of the lowest in all of the Singapore-listed REITs – that said, any negative impacts of high interest rate environment on the REIT in the near-term is very much mitigated.

With that, I have come to the end of my review of Mapletree Logistics Trust’s 4th quarter and full-year results. As always, hope you’ve found the contents presented in this post useful, and do note that everything I have shared is for educational purposes only, and do not represent any buy or sell calls for the REIT’s units. Please do your own due diligence before you make any investment decisions.

Learn More about Mapletree Logistics Trust at the Upcoming REITs Symposium 2023

The trio of Mapletree REITs (in Mapletree Industrial Trust, Mapletree Logistics Trust, and Mapletree Pan Asia Commercial Trust) will have a booth set up in the upcoming REITs Symposium (a one-day event on Saturday, 20 May 2023, from 9am – 6pm at Suntec Convention Summit 1 & 2), with representatives available for you to ask any questions you may have.

That’s not all – apart from the Mapletree REITs, 19 other REITs will also have booths set up for you to learn more about them. This is on top of panelist discussions which you can listen to, where you can learn from industry experts on the various ‘hot button’ topics including economic outlook for the second half of 2023, whether or not REITs still make a good investment considering the current high interest rate environment we’re in right now, how you, as a retail investor, can manage your REITs portfolio passively and effortlessly, opportunities and challenges in the post-pandemic era, and more.

In case you’re not already aware, I will also be participating in this year’s event as a panelist (very honoured to be invited by the organisers to share my experience up on stage, and its my first time doing so) – where, together with Gabriel Yap (author of bestselling book ‘Making Your Millions from REITs’) and Willie Keng (founder of financial blog ‘Dividend Titan’), we will be sharing with you our REIT portfolio building journey.

If you are into REIT investing, this is an event not to be missed (in my personal opinion) – You can find out more about it, and at the same time, secure your seat here (for readers of ‘The Singaporean Investor’, you can apply the discount code RS23JY to get a 50% discount off your ticket purchase – however, limited quantities are available, so make sure you act fast to avoid disappointment!)

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

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