Back in September, I wrote a post about Mapletree Logistics Trust (SGX:M44U), where I highlighted reasons why the blue-chip logistics REIT was in my ‘shopping list’ (you can check out the post here.)
Last Thursday (29 October 2020), I have finally added the REIT to my long-term investment portfolio at S$1.98 – in terms of its distribution yield, based on its full-year payout of 8.142 cents/unit in FY2019/20, it is 4.1% (you can check out all the companies in my long-term portfolio investment here.)
What I’m going to do today is to discuss about the REIT’s results for the second quarter and for the first half of the financial year 2020/21 ended 30 September 2020 (which was released on 19 October 2020) – particularly its financial results, debt and portfolio occupancy profile, as well as its distribution payout (the REIT is one that continues to pay out a distribution to its unitholders on a quarterly basis), along with my personal thoughts to share.
Let’s begin…
Financial Performance (Q2 FY2019/20 vs. Q2 FY2020/21, and 1H FY2019/20 vs. 1H FY2020/21)
Q2 FY2019/20 vs. Q2 FY2020/21:
| Q2 FY2019/20 | Q2 FY2020/21 | % Variance | |
| Gross Revenue (S$’mil) | $121.8m | $131.9m | +8.3% |
| Property Operating Expenses (S$’mil) | $12.6m | $13.0m | +3.0% |
| Net Property Income (S$’mil) | $109.1m | $118.9m | +8.9% |
| Distributable Income to Unitholders (S$’mil) | $73.7m | $78.3m | +6.2% |
On a quarter-on-quarter (q-o-q) basis, the REIT’s result was an improved one – the 8.3% growth in its gross revenue was mainly due to higher revenue from its existing properties, acquisitions in Malaysia, Vietnam, South Korea, and Japan completed in the last financial year 2019/20, along with the completed redevelopment of Mapletree Ouluo Logistics Park Phase 2 in Q1 FY2020/21, partially offset by rental rebates granted to eligible tenants impacted by the ongoing Covid-19 pandemic, and the absence of income contribution from one divested property in FY2019/20.
Property operating expenses, on the other hand, climbed 3.0% on a q-o-q basis due to property expenses from acquisitions in FY2019/20, offset by lower utilities cost, maintenance expenses, and also the absence of expenses related to the divested property in FY2019/20.
Finally, with a bigger percentage of increase in its gross revenue compared to its property operating expenses, the REIT’s net property income improved by 8.9% on a q-o-q basis to S$118.9m.
1H FY2019/20 vs. 1H FY2020/21:
| 1H FY2019/20 | 1H FY2020/21 | % Variance | |
| Gross Revenue (S$’mil) | $241.6m | $264.2m | +9.4% |
| Property Operating Expenses (S$’mil) | $26.3m | $26.5m | +0.9% |
| Net Property Income (S$’mil) | $215.3m | $237.7m | +10.4% |
| Distributable Income to Unitholders (S$’mil) | $147.3m | $156.1m | +6.0% |
On a year-on-year (y-o-y) basis, the logistics REIT also posted an improved set of results so far – the growth in its gross revenue was again due to higher revenue generated from its existing properties, along with contribution s from its newly acquired properties in FY2019/20, along with the completed redevelopment of Mapletree Ouluo Logistics Park Phase 2 in the first quarter of FY2020/21.
Property operating expenses only edged up 0.9% on a y-o-y basis, due to property expenses from properties acquired in FY2019/20, offset by lower utilities cost, maintenance expenses, and absence of expenses in relation to divested properties in FY2019/20.
My Thoughts: On a q-o-q, as well as on a y-o-y basis, I am happy to note that the REIT’s financial results continued to record improvements, even in the midst of the pandemic.
Debt Profile (Q1 FY2020/21 vs. Q2 FY2020/21)
In this section, let us take a look at the REIT’s debt profile recorded at the end of the second quarter on 30 September 2020, compared against its debt profile three months ago (i.e. Q1 FY2020/21 ended 30 June 2020) to find out if it has improved or deteriorated:
| Q1 FY2020/21 | Q2 FY2020/21 | |
| Gearing Ratio (S$’mil) | 39.6% | 39.5% |
| Interest Coverage Ratio (times) | 4.8x | 4.9x |
| Average Term to Debt Maturity (times) | 4.0 years | 3.8 years |
| Average Cost of Debt (%) | 2.3% | 2.2% |
My Thoughts: On the whole, the REIT’s latest debt profile was more or less the same compared to the previous quarter 3 months ago. There are only about 2% (or S$61m) of total debt maturing at the end of FY2020/21. Also, 80% of the REIT’s total debt is hedged or drawn in fixed rates.
As far as its gearing ratio is concerned, while at 39.5%, it may be a little on the high side, but there remains an adequate amount of debt headroom for the REIT to make further yield-accretive acquisitions before it reaches the regulatory limit of 50.0%.
Portfolio Occupancy Profile (Q1 FY2020/21 vs. Q2 FY2020/21)
Similar to how I have studied the REIT’s debt profile, I will also be doing a comparison of its portfolio occupancy profile recorded at the end of the second quarter on 30 September 2020, against its portfolio occupancy profile recorded last quarter (i.e. Q1 FY2020/21 ended 30 June 2020):
| Q1 FY2020/21 | Q2 FY2020/21 | |
| Portfolio Occupancy (%) | 97.2% | 97.5% |
| Rental Reversion (%) | +1.9% | +1.5% |
| Portfolio Weighted Average Lease Expiry (years) | 4.3 years | 4.2 years |
My Thoughts: As a unitholder, I’m happy to note that its portfolio occupancy profile is a slightly improved one compared to the previous quarter – its portfolio occupancy edged up 0.3% due to higher occupancy rates in Singapore, South Korea, and China, partially offset by a slightly lower occupancy rate in Hong Kong.
Rental reversion continued to remain positive for lease renewals – again it is a good thing to note.
Finally, with regard to the REIT’s portfolio lease expiry, I understand that 45% of the leases will only expire from FY2023/24 and beyond.
Distribution Per Unit (Q2 FY2019/20 vs. Q2 FY2020/21)
As I’ve mentioned in the beginning of this post, the REIT is one that continues to payout its unitholders on a quarterly basis.
That said, let us have a look at its distribution per unit on a q-o-q basis:
| Q2 FY2019/20 | Q2 FY2020/21 | % Variance | |
| Distribution Per Unit (S$’cents) | 2.025 cents | 2.055 cents | +1.5% |
The REIT will be announcing the ex-date, record date, as well as the payout date in due course.
In Conclusion
In my opinion, the logistics REIT’s latest set of results, both on a q-o-q as well as on a y-o-y basis, is a resilient one, and one I am happy to note as a unitholder of the REIT.
If I have to name one slight negative, it will be its slightly high gearing ratio – however, at its current gearing ratio of 39.5%, it is still some distance away from the regulatory limit of 50.0%.
With that, I have come to the end of my post. Do take note that everything that you have read in this post is for educational purposes only, and they do not imply any buy or sell calls for the REIT. As always, please do your own due diligence before you make any investment decisions.
Related Documents
Disclaimer: At the time of writing, I am a unitholder of Mapletree Logistics Trust.
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