On 21st January 2025, Mapletree Logistics Trust announced its 3QFY24/25 financial results. As shared by the manager last year, the Mapletree Logistics Trust’s strategy is to divest assets with older specifications and of limited redevelopment potential as part of their portfolio rejuvenation. What other assets will the trust divest in this quarter?
As you can see from the above key highlights, Mapletree Logistics Trust had divested three properties in China and Japan and announced the divestment of another property in Singapore in 3Q FY24/25. Post quarter-end, Mapletree Logistics Trust announced another two divestments in Malaysia and Singapore.
Using the capital recycled from the divestments, Mapletree Logistics Trust acquired three modern, Grade A assets in Malaysia and Vietnam. The manager shared that this is to position the Trust to capture demand from the growing consumption bases in these dynamic markets.
Is the strategy working? Let us take a look at the financial results to find out.
Mapletree Logistics Trust 3QFY24/25 Financial Results
In 3QFY24/25, Mapletree Logistics Trust’s gross revenue was lower mainly due to lower contribution from China and the absence of revenue contribution from divested properties. Another reason was the currency weakness (mainly KRW, HKD, and JPY) which were mitigated by higher contribution from Singapore, Australia, and Hong Kong SAR and from the contribution from acquisitions completed in 1Q FY24/25 and 4Q FY23/24. The impact of currency weakness was partially mitigated through the use of foreign currency forward contracts to hedge foreign-sourced income.
Borrowing costs rose 8.7% year-on-year to S$39.9 million. This was due to higher average interest rate on existing debts and incremental borrowings to fund acquisitions.
In view of the above weakness, a distributable income of S$101.3 million and Distribution Per Unit (“DPU”) of 2.003 cents for 3QFY24/25 was announced.
| 3QFY24/25 (S$’000) |
3QFY23/24 (S$’000) |
% Change | |
| Gross Revenue | 182,413 | 184,020 | (0.9) |
| Property Expenses |
(25,212) | (24,516) | 2.8 |
| Net Property Income | 157,201 | 159,504 | (1.4) |
| Borrowing Costs | (39,925) | (36,729) | 8.7 |
| Amount Distributable | 107,021 | 118,364 | (9.6) |
| Distribution Per Unit (“DPU”) (cents) | 2.003 | 2.253 | (11.1) |
Debt
In 3Q FY24/25, Mapletree Logistics Trust’s aggregate leverage continue to increase from previous quarter of 40.2% to 40.3%. As the debt is on the high side and seem to be trending higher, we need to keep a close watch on Mapletree Logistics Trust’s debt levels closely.
Despite a high aggregate leverage, Mapletree Logistics Trust’s debt maturity profile remains well-staggered with healthy average debt duration of 3.5 years. The manager assured that there is ample liquidity with available committed credit facilities of S$821 million to refinance S$699 million (or 12% of total debt) debt due in FY25/26.
What are the benefits of having a well-staggered debt maturity profile? Having a well-staggered debt maturity profile is crucial for REITs to manage their debt obligations effectively. By spreading out debt repayments over different time periods, REITs can avoid liquidity crunches and reduce the risk of default.
Furthermore, a well-staggered debt maturity profile allows REITs to take advantage of changes in interest rates. For example, if interest rates drop, REITs with debt maturing in the future can refinance at lower rates, reducing their interest expenses.
Overall, maintaining a well-staggered debt maturity profile is a sound financial strategy that can help ensure the long-term sustainability of the REIT’s finances.
Occupancy
Overall portfolio occupancy improved from 96.0% in previous quarter to 96.3%. The higher occupancy was driven by higher occupancy rates in Singapore, South Korea and China.
Next, let us take a look at its rental reversion and see if Mapletree Logistics Trust is still able to keep it positive.
Similar to past quarters, most markets maintained their positive rental reversions except for China. Excluding China, portfolio rental reversion was positive 5.4%. Including China, overall portfolio rental reversion was positive 3.4%.
Do you know what is rental reversion? Rental reversion refers to the change in rental rates when leases are renewed. A positive rental reversion means the new rental rate is higher than the previous rate. A negative rental reversion happens when the new rental rate is lower than the previous rate. Whether the rental reversion is positive or negative depends on the market demand and supply.
Lease Expiry
Weighted average lease expiry for the portfolio stood at approximately 2.7 years. As you can see from the chart above, overall lease expiry remains well staggered.
Mapletree Logistics Trust Share Price and Dividend Yield
Mapletree Logistics Trust share price closed at S$1.22 on Friday, 31st January 2025. Based on the Mapletree Logistics Trust share price of S$1.22 and dividend of 9.003 cents in FY23, Mapletree Logistics Trust’s current dividend yield is high 7.37%.
Do you know how to calculate the current dividend yield? The formula for calculating the current dividend yield is straightforward. It is calculated by dividing the annual dividends per share by the current market price per share. Here is the formula in mathematical terms:
Summary of Mapletree Logistics Trust 3QFY24/25 Financial Results
In my opinion, Mapletree Logistics Trust’s current quarter result remained negative. Let me summarize the pro and cons.
The pros are:
- Healthy average debt duration of 3.5 years with ample liquidity with available committed credit facilities of S$821 million to refinance S$699 million (or 12% of total debt) debt due in FY25/26.
- Portfolio occupancy improved to 96.3%.
- Excluding China, portfolio rental reversion was positive 5.4%. Lease expiry remains well staggered
- Because of falling share price, current dividend yield is high at 7.37%.
The cons are:
- Gross Revenue and Net Property Income fell 0.9% and 1.4% year-on-year respectively.
- Distribution Per Unit fell 11.1% year-on-year.
- High gearing ratio of 40.3% and it grew 0.1% as compared to previous quarter.
With every portfolio rejuvenation, it will take time to see value delivered to unitholders. Having said that, I seriously hope Mapletree Logistics Trust can take a look at managing its growing aggregate leverage.