My Personal Analysis of Mapletree Logistics Trust

Mapletree Logistics Trust

I am starting off year 2022 with my Personal Analysis of Mapletree Logistics Trust (SGX:M44U). Mapletree Logistics Trust (“MLT”) was listed on the Singapore Exchange Securities Trading Limited in 2005.

The Trust is Singapore’s first Asia-focused logistics real estate investment trust which invests in a diversified portfolio of quality, well-located, income producing logistics real estate in Singapore, Hong Kong SAR, Japan, China, Australia, South Korea, Malaysia, Vietnam and India.

Mapletree Logistics Trust Portfolio

As of 30th September 2021, Mapletree Logistics Trust has a total of 163 properties in its portfolio.

In October 2021, Mapletree Logistics Trust completed the acquisition of 9 Changi South Street 2 in Singapore and a logistics property in Japan.

The acquisition did not stop there. In December 2021, the manager announced its proposal to acquire a further 13 properties in China and 3 properties in Vietnam.

Financial Summary

Mapletree Logistics Trust FY20/21 Financial Results

It is noteworthy that Mapletree Logistics Trust started FY20/21 started with 145 properties and ended with 163 properties. In FY19/20, the trust started with 141 properties and ended with 145 properties.

Mapletree Logistics Trust was able to grow its revenue by 14.3% y-o-y. Revenue growth was attributed to accretive acquisitions in FY19/20 and FY20/21.

FY20/21
(S$’000)
FY19/20
(S$’000)
Change
Gross Revenue 561,140 490,777 14.3%
Net Property Income 499,112 438,544 13.8%
Distributable Income (To Unitholders) 333,079 301,706 10.4%
Distribution Per Unit (“DPU”) (cents) 8.326 8.142 2.3%

In terms of revenue contribution by geography, we can see that Singapore, Japan and Australia are the top 3 revenue contributors.

Mapletree Logistics Trust Revenue Contribution By Geography FY21

Occupancy Rates

Based on the latest 2Q FY21/22 financial results, occupancy stood healthy at 97.8%.

Mapletree Logistics Trust Occupancy 30 Sep 2021

Debt

As of 25 October 2021, gearing stood at 38.2%. Debt maturity profile remains well-staggered with an average debt duration of 3.6 years.

Mapletree Logistics Trust has a credit rating of BBB+ (stable outlook) from Fitch.

Mapletree Logistics Trust Debt 30 Sep 2021

Distribution History

As you can see below, Mapletree Logistics Trust was able to grow its Distribution Per Unit (DPU) y-o-y. Based on the latest closing share price of S$1.82 (7th Jan 2022) and FY20/21 DPU of 8.326 cents, this translate to a current dividend yield of 4.57%.

Mapletree Logistics Trust DPU

I believe you would have read about Mapletree Logistic Trust’s proposed acquisition of 13 properties in China and 3 properties in Vietnam. The Pro Forma DPU is projected to increase 1.1% to 8.415. Based on the closing price of S$1.82, the estimated future dividend yield will be 4.62%.

Current Valuation

The Net Asset Value per unit of Mapletree Logistics Trust is valued at S$1.33. At the closing price of S$1.82, this means that it is currently 36.8% over valued.

From the chart below, I observed that the share price is on the downtrend towards the second half of year 2021. The 1 year lowest price reached was S$1.78 on 9 March 2021.

At current closing price, this poses an opportunity for investors to enter into a position. But investors should take note that there is still a risk that the share price can still go lower.

Mapletree Logistics Trust Share Price 7 Jan 2022

Summary of My Personal Analysis of Mapletree Logistics Trust

Let me summarize the pro and cons from my analysis of Mapletree Logistics Trust.

  • It has a diversified global portfolio and thus it is not dependent on any one market.
  • Large portfolio of 163 properties or more which can be overwhelming to manage.
  • The overall portfolio occupancy stood healthy at 97.8%.
  • Healthy gearing at 38.2% with room for more debt.
  • Recent acquisitions frenzy could increase the leverage to 39.1%.
  • At the closing price of S$1.82, the current dividend yield is attractive at 4.57%.
  • Proven track record to grow DPU year on year.
  • Lacklustre Pro Forma DPU of only 1.1% with the proposed acquisition of China and Vietnam properties.
  • Mapletree Logistics Trust is trading near to 1 year low of S$1.78. Do note share price can go lower.

I hope you enjoy my Personal Analysis of Mapletree Logistics Trust!

My Personal Analysis of Mapletree North Asia Commercial Trust

Festive Walk Riding Through The Storm

This month, I am going to perform my Personal Analysis of Mapletree North Asia Commercial Trust.

Mapletree North Asia Commercial Trust (“MNACT”) was listed on the Singapore Stock Exchange (SGX) on 7th March 2013. It is the first real estate investment trust (“REIT”) that offers investors the opportunity to invest in high quality commercial properties situated in prime locations in China and Hong Kong SAR. The flagship properties are Festive Walk in Hong Kong and Gateway Plaza in Beijing.

In the past few years, Mapletree North Asia Commercial Trust expanded its portfolio to include properties in Japan and South Korea.

Mapletree North Asia Commercial Trust Portfolio

Mapletree North Asia Commercial Trust Portfolio

Mapletree North Asia Commercial Trust portfolio comprises of commercial properties situated in prime locations in Hong Kong SAR, China,  Japan and South Korea.

China

Mapletree North Asia Commercial Trust has two properties in China, namely Gateway Plaza and Sandhill Plaza.

Gateway Plaza is one of the largest and most sought-after Grade-A office building. Gateway Plaza comprises of two 25-storey towers connected by a three-storey podium area, as well as three underground floors.

Sandhill Plaza was acquired in June 2015. The Plaza is a premium quality business park development in the mature area of Zhangjiang Hi-tech Park, part of Shanghai’s Free Trade Zone.

Hong Kong

Festive walk is one of the top ten largest mall in Hong Kong. It comprises of a seven-storey territorial shopping mall, a four-storey office component on top of the mall, as well as three floors of underground car parks.

Japan

  • ABAS Shin-Yokohama Building
  • Fujitsu Makuhari Building
  • Hewlett-Packard Japan Headquarters
  • Higashi-nihonbashi 1-chome Building
  • IXINAL Monzen-nakacho Building
  • mBAY POINT Makuhari
  • Omori Prime Building
  • SII Makuhari Building
  • TS Ikebukuro Building

South Korea

In October 2020, the Manager completed its acquisition of The Pinnacle Gangnam in Seoul. This was co-investment with the Sponsor, the total acquisition cost of the property was S$276.4 million (based on MNACT’s effective interest of 50.0%).

The Pinnacle Gangnam is located at 119, Nonhyeon-dong, Gangnam-gu, Seoul. It is a
20-storey freehold office building with six underground floors and 181 parking lots.

The office building has direct access to an underground subway station (Gangnam-gu Office station) and is within 10 minutes by car from Gangnam’s high-end retail district (Cheongdam)
and from COEX Convention & Exhibition Center.

Financial Summary

FY20/21 Financial Results

The Distributable Income in FY20/21 was lower than FY19/20 because there were top-ups to the distributable income in FY19/20 to mitigate the decline in DPU and to enable a certain level of distributable income to the Unitholders (until such time the loss of revenue was recovered through the insurance claims).

During FY19/20, there were no rentals collected during the period when Festival Walk mall was temporarily closed from 13 November 2019 to 15 January 2020 and its office tower from 13 to 25 November 2019 (“Festival Walk Temporary Closure”).

The decline in DPU was partially offset by the full-year contributions from MBP and Omori acquired on 28 February 2020, and The Pinnacle Gangnam (“TPG”) acquired on 30 October 2020.

FY20/21
(S$’000)
FY19/20
(S$’000)
Change
Gross Revenue 391,415 354,478 10.4%
Net Property Income 292,040 277,487 5.2%
Distributable Income 210,150 227,928 (7.8)%
Distribution Per Unit (“DPU”) (cents) 6.175 7.124 (13.3)%

Mapletree North Asia Commercial Trust Gross Revenue by Asset

In FY20/21, Festive Walk and its Japan properties make up the bulk of the contribution of Gross Revenue by S$185.2m and S$101.3m respectively.

Occupancy Rates

As of 31st March 2021, overall portfolio occupancy stood healthy at 97.0%.

Mapletree North Asia Commercial Trust Lease Expiry Profile 31 Mar 2021

Overall Weighted Average Lease Expiry (“WALE”) stood at 2.3 years.

As you can see above, 14.6% of the leases at Festive Walk are expiring in FY21/22. With the current COVID-19 pandemic conditions and possible riot conditions in Hong Kong, it is unknown whether MNACT will have issues renewing the leases. Investors should continue to monitor the lease renewal.

The lease expiries for the assets in China, Japan and Korea remains low.

Distribution History

Distribution per unit (“DPU”) in FY20/21 was 13.3% lower than that in FY19/20.

This was due to top-ups to the distributable income (“Festival Walk Top-ups”) in FY19/20 to enable a certain level of distributable income and DPU to mitigate the loss of rental during the Festival Walk Temporary Closure.

MNACT DPU

Debt

As of 31st March 2021, gearing ratio stood at 41.5%. This was an increase of 2.2% as compared to 39.3% in 31st March 2020.

Mapletree North Asia Commercial Trust Debt Maturity Profile 31 Mar 2021

The Debt Average Term to Maturity stood at 3.12 years. From what I can see, there is no worrying debt in the short term since 6% of total debt are maturing only in March 2022.

Management

Ms. Cindy Chow Pei Pei is both an Executive Director and the Chief Executive Officer of the Manager.

She has more than 23 years of investment experience in the region, including China, Hong Kong SAR, India, Japan, Singapore, Thailand and Vietnam. Prior to joining the Manager, Ms. Chow was Chief Executive Officer, India with the Sponsor, where she was instrumental in establishing the Sponsor’s investments in India.

A quick check on MNACT’s latest news shows that she has participated in the Distribution Reinvestment Plan. This means she held more shares in MNACT. This is a positive sign which shows the CEO’s confidence in MNACT.

Current Valuation

Based on the current share price of S$1.03 and FY20/21 DPU of 6.175 cents, this translate to a current dividend yield of 6.00%.

Mapletree North Asia Commercial Trust Share Price 16 Jul 2021

Summary of My Analysis of Mapletree North Asia Commercial Trust

From what I can see, the manager of Mapletree North Asia Commercial Trust is still working on its strategy of diversifying its assets into multiple countries. The Hong Kong riots has taught the manager the importance of diversification when its flagship mall Festive Walk was damage during the riots and had to close for damage repairs.

In summary

  • Festive Walk remains the top revenue contributor of 47% with Japan properties contributing 26%. A good sign that MNACT continues to diversify its asset.
  • Gearing ratio is high at 41.5%, however, there is no worry debt maturity in the short term.
  • 14.6% of the leases at Festive Walk are expiring in FY21/22. With the current COVID-19 pandemic conditions and possible riot conditions in Hong Kong, it is unknown whether MNACT will have issues renewing the leases. Investors should continue to monitor the lease renewal.
  • CEO opted for Distribution Reinvestment Plan which shows her confidence in MNACT.
  • Decent current dividend yield of 6.00%. The dividend yield can trend higher if Hong Kong situation related to COVID-19 and riot improves. However, I foresee the DPU to remain depressed in the short term.

I will invest into MNACT if it is a long term play. In the short term, I will give MNACT a miss given the low vaccination rates in Hong Kong. I have not heard any more riot situations in Hong Kong but it may be due to the COVID-19 situation and rioters are staying indoors.

I hope you enjoy my Personal Analysis of Mapletree North Asia Commercial Trust!