Following the conclusion of its annual general meeting (AGM) last Thursday (20 July) afternoon (you can read a summary I have compiled about it here), Mapletree Logistics Trust (SGX:M44U) have released its financial results for the first quarter of the financial year 2023/24 ended 30 June after market hours this evening (25 July).
Before I review the REIT’s results, here’s a short introduction about the REIT if you are new to it – Mapletree Logistics Trust is the first Asia-focused logistics REIT listed on the Singapore Exchange in July 2005. At the time of writing, its portfolio comprises 193 income-producing properties used for logistics purposes in the following countries (with the number of properties in each country in brackets): Singapore (52), Australia (14), China (43), Hong Kong (9), India (2), Japan (25), Malaysia (16), South Korea (21), and Vietnam (10). The total value of its assets under management is S$13.5 billion.
In the rest of this post, you will find my review of its latest financial results, portfolio occupancy and debt profile, as well as its distribution payout to unitholders.
Let’s get started…
Financial Performance (Q1 FY2022/23 vs. Q1 FY2023/24)
Despite not mandated to report its full financial performance in the first and third quarters, Mapletree Logistics Trust have continued to do so – which is something I like as it allows me to get a more ‘complete’ update about its performances for the quarter (instead of just a business update of its portfolio occupancy and debt profile).
The following table is the logistics REIT’s financial performance for the first quarter of FY2023/24 compared against that recorded in the same time period last year (i.e., Q1 FY2022/23):
| Q1 FY2022/23 | Q1 FY2023/24 | % Variance | |
| Gross Revenue (S$’mil) | $187.7m | $182.2m | -2.9% |
| Property Operating Expenses (S$’mil) | $24.4m | $24.1m | -1.6% |
| Net Property Income (S$’mil) | $163.2m | $158.1m | -3.1% |
| Distributable Income to Unitholders (S$’mil) | $108.6m | $112.0m | +3.1% |
My Observations: The logistics REIT’s financial performance for the first quarter of the financial year 2023/24, compared against the same time period last year, saw slight declines (with the only exception being its distributable income to unitholders, which edged up by 3.1%).
The 2.9% and 3.1% decline in its gross revenue and net property income respectively can be attributed to a weaker Chinese Yuan, Japanese Yen, South Korean Won, and the Australian Dollar against the Singapore Dollar. However, the impact of currency fluctuations was partially mitigated through the use of foreign currency forward contracts to hedge the foreign-sourced income distributions. The decline was mitigated by better performance from its existing properties in Singapore, along with contributions from properties in Japan and South Korea which were completed in Q1 FY2023/24.
Property operating expenses declined by 1.6% due to the effect from the depreciation of Chinese Yuan, Japanese Yen, and South Korean Won against the Singapore Dollar, partially offset by expenses incurred by newly acquired properties completed in Q1 FY2023/24, higher insurance expense, and repair and maintenance expense.
Finally, the 3.1% increase in its distributable income to unitholders was due to the inclusion of a divestment gain, and capital gain tax write-back.
Portfolio Occupancy (Q4 FY2022/23 vs. Q1 FY2023/24)
Next, let us take a look at the REIT’s portfolio occupancy profile in the table below – where you will find a comparison of the figures reported in the current quarter under review (i.e., Q1 FY2023/24 ended 30 June 2023) compared to that reported in the previous quarter (i.e., Q4 FY2022/23 ended 31 March 2023) to find out if it has continued to remain resilient, just like in the previous quarters:
| Q4 FY2022/23 | Q1 FY2023/24 | |
| Portfolio Occupancy (%) | 97.0% | 97.1% |
| Rental Reversion (%) | +3.1% | +4.2% |
| Portfolio WALE (by NLA – years) | 3.1 years | 3.1 years |
My Observations: The REIT’s portfolio occupancy profile continues to remain resilient, with the highlight being the REIT’s ability to record an even better rental reversion (at +4.2%) for new and/or renewed leases in Singapore, Japan, and Vietnam in Q1 FY2023/24.
As far as occupancy rates for its properties in the various geographical locations are concerned, only the occupancy rate of its Singapore properties dipped slightly (from 98.4% in Q4 FY2022/23 ended 31 March 2023 to 98.2% in Q1 FY2023/24 ended 30 June 2023). Its properties in Japan, Malaysia, Vietnam, Australia, and India have maintained near-full, or 100% occupancy rates.
On lease expiries ahead, they are well-staggered, with 23.9% of the leases due for renewal in the remaining 3 quarters of FY2023/24, 23.3% of the leases due for renewal in FY2024/25, 18.2% of the leases due for renewal in FY2025/26, and the remaining 34.6% of the leases due for renewal only in FY2026/27 or later.
Debt Profile (Q4 FY2022/23 vs. Q1 FY2023/24)
Making sure a REIT’s debt profile continues to remain healthy becomes all the more important amid the high interest rate environment we are in currently.
In this section, let us take a look at Mapletree Logistics Trust’s debt profile recorded for the current period under review (i.e., Q1 FY2023/24 ended 30 June 2023) compared against that recorded in the previous quarter (i.e., Q4 FY2022/23 ended 31 March 2023) to find out if it is a healthy one:
| Q4 FY2022/23 | Q1 FY2023/24 | |
| Aggregate Leverage (%) | 36.8% | 39.5% |
| Interest Coverage Ratio (times) | 4.0x | 3.9x |
| Average Term to Debt Maturity (years) | 3.8 years | 3.8 years |
| Average Cost of Debt (%) | 2.7% | 2.5% |
| % of Borrowings Hedged to Fixed Rates (%) | 84% | 82% |
My Observations: Aggregate leverage climbed by 2.7 percentage points (pp) to 39.5% as a result of additional loans drawn to fund the acquisitions in Japan, South Korea, and Australia. Despite of that, there still remains a good debt headroom before the regulatory limit of 50.0%.
On the other hand, the average cost of debt improved by 0.2pp due to lower interest rates on Japanese Yen loans drawn to fund acquisitions.
With 82% of borrowings hedged to fixed rates, the remaining 18% that is unhedged may see an impact of ~S$0.6m decrease in distributable income, or ~0.01 cents in DPU per quarter for every 25 basis point increase in base rates.
On borrowings that are due for refinancing ahead, only 5% (or S$277m) of borrowings will be due in the remaining 3 quarters of the current financial year 2023/24 (however, there remains more than sufficient credit facilities of S$895m to refinance the borrowings), 13% of borrowings due in FY2024/25, 16% of borrowings due for refinancing in FY2025/26, and the remaining 66% of borrowings due for refinancing in FY2026/27 and beyond.
Looking ahead, I am of the opinion that interest rates are likely to go down to 3% at end-2025 and staying there – with 34% of borrowings due for refinancing from now till end FY2025/26 (on 31 March 2026), the REIT could be impacted by the high interest rate environment somewhat.
Distribution Payout to Unitholders (Q1 FY2022/23 vs. Q1 FY2023/24)
For those who like to receive a distribution payout once every quarter will be pleased to note that the logistics REIT’s management have continued to do so in this time frequency.
For the current period under review (i.e., Q1 FY2023/24), a distribution per unit of 2.271 cents/unit was declared – more or less the same as its payout of 2.268 cents/unit declared in the same time period last year (i.e., Q1 FY2022/23).
However, an advance payout of 0.234 cents/unit for the period between 01 and 10 April 2023 (declared before the private placement) had been made on 22 May 2023. Hence, this time round, unitholders will only receive 2.037 cents/unit (for the period between 11 April and 30 June 2023).
Also, the REIT will be resuming its dividend reinvestment plan for this quarter’s distribution payout to help strengthen its working capital reserves, as well as help finance the progressive funding needs of its redevelopment projects. Unitholders have the option to receive their distribution payout in cash (which will be the default), additional units of the logistics REIT (the price will be determined at a later date), or a combination of both.
If you are a unitholder of the logistics REIT, take note of the following dates on its distribution payout:
Ex-Date: 01 August 2023
Record Date: 02 August 2023
Payout Date (for Cash Payout and Depositing of Units into Your Account): 19 September 2023
CEO Ng Kiat’s Comments & Outlook (from the REIT’s Press Release)
“We continue to see the impact of weaker currencies and higher borrowing costs. However, the improved quality and resilience of our portfolio have continued to provide stability to our results. Given the economic uncertainty, our focus is to maintain portfolio stability, while continuing our efforts to rejuvenate the portfolio towards high-specs, modern assets.”
Closing Thoughts
Its latest financial results, while being a slight negative, is pretty much within my expectations – where its revenue and net property income is impacted by weaker foreign currencies against the strong Singapore Dollar. If not for the higher divestment gain and capital gain tax write-back, its distribution payout to unitholders would have declined as well due to higher borrowing costs.
However, its portfolio occupancy profile continues to remain very resilient, where its properties in many locations have achieved a near-full, or 100.0% occupancy.
As far as its debt profile is concerned, it continues to remain healthy – where its current aggregate level is at a safe distance away from the regulatory limit, allowing the REIT the flexibility to embark on further yield-accretive acquisitions if an opportunity to do so arises.
With that, I have come to the end of my review of Mapletree Logistics Trust’s latest results for the 1st quarter of FY2023/24. As always, I hope you have found the contents presented in this post useful, and do note that everything you have just read above, especially the opinions, are purely mine which I am sharing for educational purposes only. You are strongly encouraged to do your own due diligence before making any investment decisions.
Related Documents
Disclaimer: At the time of writing, I am a unitholder of Mapletree Logistics Trust.
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