4 Key Points from Mapletree Logistic Trust’s Latest Earnings

·3-min read

A month ago, it seemed like Singapore’s fight against COVID-19 was finally about to end.

Back in June, a slew of restrictions was lifted as infection counts were brought under control amid an acceleration in vaccinations.

Unfortunately, an explosion in COVID-19 clusters has once again forced the Singapore government to tighten restrictions.

Thankfully, our investments don’t necessarily have to endure the same volatile ride.

I’m referring to industrial REITs that displayed tremendous resilience throughout the pandemic.

One of them, Mapletree Logistics Trust (SGX: M44U), or MLT, has just released its results for its fiscal 2020 first quarter (1Q2022) ended 30 June 2021.

Here are four key points investors should take note of.

Portfolio resilience

As expected, MLT’s well-diversified portfolio of 163 industrial properties continued to display resilience, aided by sustained demand for warehouse space.

MLT reported an overall portfolio occupancy of 97.8% as of 30 June, a slight improvement from 97.5% three months prior.

The increase was due to higher occupancy of MLT’s properties in South Korea and China.

On another positive note, the REIT’s weighted average lease expiry (WALE) also inched up from 3.6 years to 3.8 years, after leases for 391,517 square metres of space were renewed or replaced.

For these renewals, MLT enjoyed upwards rental reversions of 2.2%.

Increased NPI and DPU

MLT continued its strong performance in recent quarters, reporting a gross revenue of S$163.7 million for the quarter, a year on year improvement of 23.7%.

Correspondingly, net property income (NPI) also rose by 21.3% year on year to S$144.2 million.

The improved performance was attributed to contributions from accretive acquisitions, redeveloped properties and positive rental reversions.

Due to the better results, MLT declared a distribution per unit (DPU) of S$0.02161, a 5.7% increase from the same period a year ago.

If MLT’s DPU maintains at this level for the next three quarters, MLT will retain its enviable record of having raised DPU every year since 2016.

Strong capital position

Buoyed by the strong performance, MLT has exercised strong capital management.

As of 30 June, the REIT retains a healthy aggregate leverage ratio of 38.2%, well below the MAS-mandated cap of 50%.

MLT’s interest coverage ratio also sits strongly at 5.2 times, while its average debt duration is 3.7 years.

Out of the REIT’s total debt of S$4.2 billion, only 17% is due within the next two fiscal years, with the remaining well-staggered across FY23/24 and beyond.

MLT also has committed credit facilities of S$667 million in place, which it can tap on to refinance S$159 million, or 4%, of its total debt.

Upcoming acquisition

Earlier this month, MLT announced that it had been granted the option to purchase a logistics property in Changi South, Singapore.

The property will be MLT’s 53rd in Singapore.

Located in proximity to Changi Airport and Singapore Expo, the warehouse building is expected to attract demand from high-value industries with time-sensitive goods such as the electronics and pharmaceutical sectors.

The REIT will purchase the 11,506 square metre building for S$24.5 million, in a deal fully funded by debt.

The property is expected to be DPU-accretive and has a projected stabilised NPI yield of 6.2%.

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Disclosure: Herman Ng does not own shares in any of the companies mentioned.

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