There are a total of 3 REITs listed on the Singapore Exchange managed by Mapletree Investments Pte Ltd, and I am a unitholder of all of them:
(i) Mapletree Industrial Trust (SGX:ME8U) – invested since October 2020; Reasons for my investment back then can be found here
(ii) Mapletree Logistics Trust (SGX:M44U) – invested since October 2020; Reasons for my investment back then can be found here
(iii) Mapletree Pan Asia Commercial Trust (SGX:N2IU) – back when I invested in the REIT, it was known as Mapletree Commercial Trust (where all its properties are located in Singapore, and it was renamed following its merger with Mapletree North Asia Commercial Trust (where its properties are located in Hong Kong, China, Japan, and South Korea) in August 2022. You can read about reasons why I invested in the REIT here
All 3 of them have a financial year ending every 31 March, and have a quarterly distribution payout frequency. Additionally, the 3 Mapletree REITs have continued to report their full financial statements on a quarterly basis, which is something I like as a unitholder as it allows me to better understand their performances.
With the conclusion of yet another quarter on 31 December 2023, Mapletree Logistics Trust was the first to report its results for the 3rd quarter of FY2023/24 on the evening of 24 January, followed by Mapletree Industrial Trust after trading hours next day (i.e., 25 January). Mapletree Pan Asia Commercial Trust was the last to report its results yesterday evening (i.e., 29 January).
In this article, you will find my review of the 3 Mapletree REITs’ latest results (in the order of their results release – hence it will be Mapletree Logistics Trust, followed by Mapletree Industrial Trust, and then Mapletree Pan Asia Commercial Trust), focusing on their financial performance, portfolio occupancy and debt profile, as well as their distribution payout to unitholders:
Mapletree Logistics Trust (SGX:M44U) – Results Released on 24 January
As at 31 December 2023, its portfolio comprises 189 logistics assets in 9 countries worth a total of S$13.3 billion.
Financial Performances:
Q3 FY2022/23 vs. Q3 FY2023/24:
| Q3 FY2022/23 | Q3 FY2023/24 | % Variance | |
| Gross Revenue (S$’mil) | $180.2m | $184.0m | +2.1% |
| Property Operating Expenses (S$’mil) | $23.0m | $24.5m | +6.5% |
| Net Property Income (S$’mil) | $157.2m | $159.5m | +1.5% |
| Distributable Income to Unitholders (S$’mil) | $107.1m | $112.2m | +4.8% |
My Observations: The logistics REIT’s results for the third quarter was a rather muted one, but pretty much within my expectations given the slowdown of acquisition activities due to the continued high interest rate environment we are in at the moment – with gross revenue, net property income, and distributable income to unitholders recording a low single-digit percentage growth.
The 2.1% improvement in its gross revenue was mainly due to higher contribution from existing properties mainly in Singapore, and contribution from acquisitions in Japan, South Korea, as well as in Australia completed in Q1 FY2023/24, partly offset by lower contribution from existing properties in China, absence of revenue from divested properties and properties under redevelopment, along with a weaker Chinese Renminbi, Japanese Yen, Hong Kong Dollar, Malaysian Ringgit, and Australian Dollar against the Singapore Dollar.
As a result of a 6.5% increase in property operating expenses (due to contributions from the newly acquired properties completed in Q1 FY2023/24, along with an increase in property tax and maintenance expenses), its net property income only inched up by 1.5% to $159.5m.
9M FY2022/23 vs. 9M FY2023/24:
| 9M FY2022/23 | 9M FY2023/24 | % Variance | |
| Gross Revenue (S$’mil) | $551.7m | $552.9m | +0.2% |
| Property Operating Expenses (S$’mil) | $71.3m | $73.3m | +2.8% |
| Net Property Income (S$’mil) | $480.4m | $479.6m | -0.2% |
| Distributable Income to Unitholders (S$’mil) | $323.7m | $336.7m | +4.0% |
My Observations: The same can also be said for the REIT’s financial results for the first 9 months of FY2023/24 (compared to the same time period last year), where the growth was pretty much a muted one.
Gross revenue was up by a mere 0.2%, due to higher contribution from existing properties (mainly in Singapore and Hong Kong), contributions from acquisitions in Japan, South Korea, and Australia completed in Q1 FY2023/24, partly offset by absence of revenue from divested properties and properties under redevelopment, lower contribution from existing properties in China, along with a weaker Chinese Renminbi, Japanese Yen, Hong Kong Dollar, Malaysian Ringgit, and Australian Dollar against the Singapore Dollar.
As a result of a higher percentage increase in its property operating expenses compared to its gross revenue (by 2.8%, compared to a 0.8% increase in its gross revenue) due to contribution from acquisitions completed in Q1 FY2023/24, higher property tax and maintenance expenses, its net property income inched down by 0.2% to $479.6m.
Portfolio Occupancy (Q2 FY2023/24 vs. Q3 FY2023/24):
| Q2 FY2023/24 | Q3 FY2023/24 | |
| Portfolio Occupancy (%) | 96.9% | 95.9% |
| Rental Reversion (%) | +0.2% | +3.8% |
| Portfolio WALE (by NLA – years) | 3.0 years | 2.9 years |
My Observations: 2 things to highlight: first is the slight 1.0 percentage point (pp) dip in its portfolio occupancy, which can be attributed to a fall in occupancy rates in Singapore and Hong Kong (mainly due to SUA expiries at older specs buildings slated for divestment), Malaysia (due to successful repossession of a vacant space in an asset, which is expected to be backfilled by Q4 FY2023/24), as well as in Japan.
In terms of lease expiries, 7.6% of the leases are due to renewal in the final quarter of the year. In the next 3 financial years, it has an average of about 20% of leases due for renewal each year – which is well-spread out.
Debt Profile (Q2 FY2023/24 vs. Q3 FY2023/24):
| Q2 FY2023/24 | Q3 FY2023/24 | |
| Aggregate Leverage (%) | 38.9% | 38.8% |
| Interest Coverage Ratio (times) | 3.8x | 3.7x |
| Average Term to Debt Maturity (years) | 3.8 years | 3.7 years |
| Average Cost of Debt (%) | 2.5% | 2.5% |
| % of Borrowings Hedged to Fixed Rates (%) | 83% | 83% |
My Observations: Aggregate leverage edged by 0.1pp to 38.8% due to repayment of loans using net proceeds from the divestment of properties in Malaysia and Singapore, as well as funds received from internal sources including cash retained via the distribution reinvestment plan.
Looking at its debt maturity profile ahead, it has just 2% (or S$110m) of borrowings due for refinancing in the final quarter of FY2023/24, 7% (or S$402m) of borrowings due in the next financial year 2024/25. Between FY2025/26 and FY2028/29, it has an average of about 15% of borrowings due for refinancing in each financial year, which I consider to be very well-staggered.
Distribution Payout to Unitholders:
For the 3rd quarter, a distribution payout of 2.253 cents/unit was declared – a slight 1.2% improvement compared to the payout of 2.227 cents/unit last year, contributed by new acquisitions, as well as divestment gains.
If you are a unitholder of the logistics REIT, do take note of the following dates:
Ex-Date: 31 January 2024
Record Date: 01 February 2024
Payout Date: 20 March 2024
CEO Ms Ng Kiat’s Comments and Outlook:
“MLT has delivered another set of resilient results, underpinned by our diversified portfolio. However, weaker regional currencies, high borrowing costs and a challenging leasing environment in China continue to pose headwinds to our financial performance.
We remain laser-focused on rejuvenating our portfolio towards modern, high-specs assets, and continue to implement proactive risk management strategies to navigate the uncertain economic landscape.”
Mapletree Industrial Trust (SGX:ME8U) – Results Released on 25 January
As at 31 December 2023, its total assets under management was S$9.2 billion, which comprised 56 properties in North America (including 13 data centres held through the joint venture with Mapletree Investments Pte Ltd), 85 properties in Singapore, and 1 property in Japan (Osaka).
Financial Performances:
Q3 FY2022/23 vs. Q3 FY2023/24:
| Q3 FY2022/23 | Q3 FY2023/24 | % Variance | |
| Gross Revenue (S$’mil) | $170.4m | $173.9m | +2.0% |
| Property Operating Expenses (S$’mil) | $41.6m | $44.0m | +5.7% |
| Net Property Income (S$’mil) | $128.8m | $129.9m | +0.8% |
| Distributable Income to Unitholders (S$’mil) | $88.4m | $95.3m | +7.8% |
My Observations: The rather muted set of results reported by the REIT for the 3rd quarter (where its top- and bottom-lines were up by just a low single-digit percentage) was pretty much within my expectations, given the lack of acquisitions in the current high interest rate environment.
In terms of the 2.0% increase in its gross revenue, it was driven by revenue contributions from the newly acquired data centre (on 28 September 2023) in Osaka, Japan, as well as contributions from new leases from the redevelopment project at Mapletree Hi-Tech Park @ Kallang Way. However, this was partly offset by a loss of income from the non-renewal of some leases.
Distributable income to unitholders was up by 7.8%, as a result of higher net property income, as well as distribution of compensation received from 2 & 4 Loyang Way and net divestment gain from 65 Tech Park Crescent previously withheld partially, offset by the absence of distribution from net divestment gain from 26A Ayer Rajah Crescent for Q3 FY2022/23.
9M FY2022/23 vs. 9M FY2023/24:
| 9M FY2022/23 | 9M FY2023/24 | % Variance | |
| Gross Revenue (S$’mil) | $513.8m | $518.6m | +0.9% |
| Property Operating Expenses (S$’mil) | $124.7m | $129.4m | +3.7% |
| Net Property Income (S$’mil) | $389.0m | $389.3m | +0.1% |
| Distributable Income to Unitholders (S$’mil) | $269.5m | $279.5m | +3.7% |
My Observations: Similar to its 3rd quarter results, Mapletree Industrial Trust’s results for the first 9 months of FY2023/24 compared to the same time period last year was also quite muted – with its gross revenue, net property income, and distributable income to unitholders all growing by only a low single-digit percentage.
The 0.9% increase in its gross revenue was mainly due to new leases across the REIT’s portfolio, offset by the weakening of the USD (against the Singapore Dollars, which the REIT reports its financial results in), and loss of income from non-renewal of leases.
Property operating expenses was up by 3.7%, mainly attributable to higher property maintenance expenses, property taxes, and marketing cost. This led to the REIT’s net property income recording a very slight 0.1% improvement.
Finally, the 3.7% increase in its distributable income to unitholders was mainly due to higher distribution declared by joint venture and higher distribution from proceeds from divestment that was completed in the previous financial years, partially offset by higher borrowing costs (due to the higher interest rate environment, and additional interest incurred in relation to the acquisition of the data centre in Osaka, Japan.
Portfolio Occupancy (Q2 FY2023/24 vs. Q3 FY2023/24):
| Q2 FY2023/24 | Q3 FY2023/24 | |
| Portfolio Occupancy (%) | 93.2% | 92.6% |
| Portfolio WALE (by Gross Rental Income – years) | 4.20 years | 4.40 years |
My Observations: Despite a slight 0.6pp decline in its portfolio occupancy (which can be attributed to a decline in occupancy rate in its data centres [down from 93.4% in Q2 FY2023/24 to 91.0% in Q3 FY2023/24], flatted factories [down from 98.8% in Q2 FY2023/24 to 98.6% in Q3 FY2023/24], stack-up/ramp-up buildings [down from 98.9% in Q2 FY2023/24 to 97.8% in Q3 FY2023/24], as well as in its light industrial buildings [down from 55.5% in Q2 FY2023/24 to 52.9% in Q3 FY2023/24]), its overall portfolio occupancy, at 92.6%, continues to remain strong (in my personal opinion).
In terms of lease expiries, for the remaining quarter of FY2023/24, only 1.8% of leases are due for renewal. In the coming financial years, it has an average of about 16.0% of leases due for renewal in each financial year between FY2024/25 and FY2027/28.
On tenant contributions, its top tenant (HP) contributes 6.0% towards the REIT’s revenue, and no other tenants contributing more than 3.3% towards its revenue – which is well-diversified.
Debt Profile (Q2 FY2023/24 vs. Q3 FY2023/24):
| Q2 FY2023/24 | Q3 FY2023/24 | |
| Aggregate Leverage (%) | 37.9% | 38.6% |
| Interest Coverage Ratio (times) | 4.6x | 4.7x |
| Average Term to Debt Maturity (years) | 3.3 years | 3.4 years |
| Average Cost of Debt (%) | 3.2% | 3.1% |
| % of Borrowings Hedged to Fixed Rates (%) | 79.2% | 79.5% |
My Observations: Debt profile for the period ended 31 December 2023 (i.e., Q3 FY2023/24) compared to the period ended 30 September 2023 (i.e., Q2 FY2023/24) was a mixed one – with aggregate leverage inching up by 0.7pp to 38.6% (due to borrowings for the acquisition of data centre in Osaka, Japan; however, it is still a good distance away from the regulatory limit of 50.0%). On the other hand, its average cost of debt inched down slightly (by 0.1pp to 3.1%), and percentage of borrowings hedged to fixed rates up by another 0.3pp to 79.5% (which in my opinion is at a considerably high level).
As far as debt maturity is concerned, in the final quarter of FY2023/24, it has 3.2% (or S$100m) of borrowings due for refinancing. In FY2024/25, it has 11.5% (or S$358.3m) of borrowings due for refinancing, with another 19.1% (or $595.4m) of borrowings due for refinancing in FY2025/26, 19.1% (or S$599.6m) of borrowings due for refinancing in FY2026/27. 47.1% (or S$1,470.7m) of borrowings will only be due for refinancing only in FY2027/28 or later.
Distribution Payout to Unitholders:
For the 3rd quarter, a distribution per unit of 3.36 cents/unit was declared – compared to the payout of 3.39 cents/unit declared in the same time period last year, this represented a slight 0.9% decline due to a larger unit base.
If you are a unitholder of the industrial and data centre REIT, do take note of the following dates:
Ex-Date: 01 February 2024
Record Date: 02 February 2024
Payout Date: 07 March 2024
CEO Mr Tham Kuo Wei’s Comments and Outlook:
“Our resilient performance is underpinned by our steadfast portfolio rebalancing efforts such as the acquisition of the Osaka Data Centre and the redevelopment project at Kallang Way. We will continue to build on our strengths through accretive investments and selective divestments of non-core assets while focusing on prudent capital management and proactive tenant retention.”
Mapletree Pan Asia Commercial Trust (SGX:N2IU) – Results Released on 29 January
The retail and office REIT had the biggest assets under management among the 3 Mapletree REITs – at S$16.4 billion as at 31 December 2023. Properties in its portfolio include 5 in Singapore, 1 in Hong Kong, 2 in China, 9 in Japan, and 1 in South Korea.
Financial Performances:
Q3 FY2022/23 vs. Q3 FY2023/24:
| Q3 FY2022/23 | Q3 FY2023/24 | % Variance | |
| Gross Revenue (S$’mil) | $239.8m | $241.6m | +0.8% |
| Property Operating Expenses (S$’mil) | $60.4m | $59.2m | -2.0% |
| Net Property Income (S$’mil) | $179.4m | $182.4m | +1.7% |
| Distributable Income to Unitholders (S$’mil) | $127.0m | $115.3m | -9.3% |
My Observations: Considering the fact that there are no other acquisition activities following the completion of the merger with Mapletree North Asia Commercial Trust in July 2022, the REIT’s muted results for the 3rd quarter was very much within my expectations – with the slight increase in its gross revenue and net property income due to higher contribution from the Singapore properties, partially offset by lower contribution from the overseas properties.
Property operating expenses saw a 2.0% decline mainly due to the refund of prior year’s property tax and lower marketing expenses, partially offset by the full-period impact from higher utilities expenses as a result of the higher contracted rates (which was up by 6.8% from S$8.7m in Q3 FY2022/23 to S$9.3m in Q3 FY2023/24).
The 9.3% fall in the REIT’s distributable income to unitholders was mainly due to the lack of a net realised gain of S$9.3m from the unwinding of a financial derivative instruments that was distributed to unitholders in Q3 FY2022/23 – stripping that out, its distributable income to unitholders would be down by 2.1%.
9M FY2022/23 vs. 9M FY2023/24:
| 9M FY2022/23 | 9M FY2023/24 | % Variance | |
| Gross Revenue (S$’mil) | $592.9m | $718.9m | +21.2% |
| Property Operating Expenses (S$’mil) | $138.4m | $174.1m | +25.8% |
| Net Property Income (S$’mil) | $454.6m | $544.8m | +19.8% |
| Distributable Income to Unitholders (S$’mil) | $328.0m | $348.0m | +6.1% |
My Observations: Looking at the REIT’s results for the first 9 months of FY2023/24, its gross revenue and net property income still saw double-digit percentage improvements (by 21.2% and 19.8% respectively), largely due to the full-period contribution from the overseas properties acquired through the merger (with Mapletree North Asia Commercial Trust completed in July 2022), along with a higher contribution from its Singapore properties.
However, if contributions from the overseas properties were excluded, then its gross revenue and net property income would have been up by just 5.0% and 3.8% respectively.
The 25.8% jump in its property operating expenses was due to property operating expenses incurred by the overseas properties after they were added to the REIT’s property portfolio; excluding that, its property operating expenses would be up by 9.1% due to higher utilities expenses as a result of higher contracted rates, partially offset by the refund of prior year’s property tax.
Portfolio Occupancy (Q2 FY2023/24 vs. Q3 FY2023/24):
| Q2 FY2023/24 | Q3 FY2023/24 | |
| Portfolio Occupancy (%) | 96.3% | 96.7% |
| Portfolio WALE (years) | 2.5 years | 2.5 years |
My Observations: The 0.4pp increase in Mapletree Pan Asia Commercial Trust’s portfolio occupancy can be attributed to improvements in occupancy rates in all of its properties except for VivoCity (which saw a slight dip from 100.0% in Q2 FY2023/24 to 99.7% in Q3 FY2023/24).
Rental reversion was at a positive +4.1%, with all of its properties recording a positive rental reversion except for Festival Walk (at -8.1%; however, it was a slight improvement from -9.5% in Q2 FY2023/24), China properties (at -3.2%; however, it improved slightly from -3.5% recorded in Q2 FY2023/24), and its Japan properties (at -0.4%; however, it saw a slight improvement from -0.8% recorded in Q2 FY2023/24).
Finally, as far as the REIT’s lease expiries are concerned, in the final quarter of FY2023/24, only 1.3% of retail leases, and 3.3% of office/business park leases will be due for renewal. Over the next 3 financial years (between FY2024/25 and FY2026/27), it has an average of about 10% of retail leases and 10% of office/business park leases expiring in one financial year – which I consider to be well-spread out.
Debt Profile (Q2 FY2023/24 vs. Q3 FY2023/24):
| Q2 FY2023/24 | Q3 FY2023/24 | |
| Aggregate Leverage (%) | 40.7% | 40.8% |
| Interest Coverage Ratio (times) | 3.0x | 3.0x |
| Average Term to Debt Maturity (years) | 3.0 years | 2.8 years |
| Average Cost of Debt (%) | 3.3% | 3.3% |
| % of Borrowings Hedged to Fixed Rates (%) | 80.0% | 85% |
My Observations: Mapletree Pan Asia Commercial Trust’s debt profile remains pretty stable compared to the previous quarter 3 months ago – the only noticeable difference is the further 5.0pp improvement in the percentage of borrowings hedged to fixed rates – which in my opinion is a very high one.
On the REIT’s debt maturity-front, it has no more refinancing requirements for the current FY2023/24. In the financial years thereafter, its debt maturity is quite well-staggered, as it has about 21% of borrowings due for refinancing each year between FY2024/25 and FY2026/27. It has about 37% of borrowings due for refinancing in FY2027/28 or later.
Distribution Payout to Unitholders:
For the current quarter under review (i.e., Q3 FY2023/24), the management have declared a distribution payout of 2.20 cents/unit – compared to its payout of 2.42 cents/unit declared in the same time period last year (i.e., Q3 FY2022/23), this represented a 9.1% decline, due to higher interest rates, and the absence of a one-off cross-currency interest rate swap gain recorded in Q3 FY2022/23.
If you are a unitholder of the REIT, do take note of the following dates:
Ex-Date: 05 February 2024
Record Date: 06 February 2024
Payout Date: 14 March 2024
CEO Ms Sharon Lim’s Comments and Outlook:
“We are proud to continue to post gains in gross revenue and NPI. This reflects our resilience and operational effectiveness in an era of challenging external factors, including higher utility costs and adverse forex movements.
Confronting broader headwinds, we concentrate on managing our assets and operations effectively. This focus has led to enhanced operational performance, as seen in higher committed occupancies across all markets, boosting our portfolio committed occupancy to an impressive 96.7%. Moreover, our portfolio rental reversion climbed further to 4.1%. Another key highlight is VivoCity, one of our two core assets, as its tenant sales approach a full year record high. With the completion of the reconfiguration exercise on Level 1, we have unlocked further potential of the mall. This proactiveness will be replicated at Festival Walk in Hong Kong to adapt to market shifts and improve its performance. Our commitment to agile asset and prudent capital management remains firm, as it is pivotal in maintaining healthy occupancy levels and steady rental income, positioning MPACT to seize opportunities as they arise.”
Closing Thoughts
Among the 3 Mapletree REITs, only Mapletree Logistics Trust reported an increase in its distribution payout to unitholders compared to last year (albeit just slightly by 0.5% due to contributions from new acquisitions, and divestment gains). Mapletree Industrial Trust’s distribution payout inched down by 0.9% due to a higher unit base (as a result of new units issued pursuant to the distribution reinvestment plan), while higher financial costs and a lack of a one-off resulted in a 9.1% drop in Mapletree North Asia Commercial’s Trust’s distribution payout.
Financial results were pretty much muted for all the 3 Mapletree REITs, both for the 3rd quarter, as well as for the first 9 months of FY2023/24 – only Mapletree Pan Asia Commercial Trust’s financial results for the first 9 months of FY2023/24 saw a double-digit percentage growth due to effects of its merger with Mapletree North Asia Commercial Trust completed in July 2022.
In terms of the Mapletree REITs’ debt profile, they are all at very healthy levels, with all 3 of them having an aggregate leverage of no more than 41%, and a very high percentage of borrowings hedged at fixed rates (upwards of at least 79.5%). Debt maturity profile for the 3 REITs are also very well-staggered out.
Finally, on portfolio occupancy, all 3 of them have occupancy rates of above 90%, which is very strong. Some of you may be concerned about Mapletree Pan Asia Commercial Trust’s properties in Hong Kong (Festival Walk) and China (Sandhill Plaza and Gateway Plaza)- while rental reversion is still at a negative percentage for the current quarter under review (i.e., Q3 FY2023/24), but it has improved from the previous quarter 3 months ago (i.e. Q2 FY2023/24).
All in all, business fundamentals of the 3 Mapletree REITs continue to be sound, and its latest performances are well-within my expectations. With that, I have come to the end of my review of the latest 3rd quarter and 9-month results for the Mapletree trio of REITs. Please take note that all opinions above are purely my own which I am sharing for educational purposes only. You are strongly encouraged to do your own due diligence before you make any investment decisions.
Related Documents
Mapletree Logistics Trust:
Mapletree Industrial Trust:
Mapletree Pan Asia Commercial Trust:
Disclaimer: At the time of writing, I am a unitholder of all 3 Mapletree REITs.
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