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Mapletree Logistics Trust’s Latest Earnings: 4 Things Investors Should Know

Logistics REIT

Tim Phillips

July 22, 2022

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For investors in Singapore, it’s that time of year again when companies report earnings. Some of the most closely-watched results are from the city state’s big real estate investment trusts (REITs).

Singapore REITs provide a business update every quarter and give investors an idea of how the REIT is performing.

One of the biggest REITs listed here on the SGX, and also a constituent of the Straits Times Index , is Mapletree Logistics Trust (SGX: M44U).

The logistics-focused REIT reported its latest Q1 FY22/23 earnings yesterday after the market closed.

Without further ado, here are four key things that investors should know about Mapletree Logistics Trust’s latest results.

1. Dividend rises 5%

Most investors in REITs tend to look at the distribution per unit (DPU), otherwise known as the dividend, that is paid out to unitholders.

In this respect, Mapletree Logistics Trust has been performing well as the REIT reported a 5% year-on-year rise in its Q1 FY22/23 DPU to 2.268 Singapore cents.

Stable occupancy and contributions from an enlarged portfolio were key factors although investors should note that the REIT’s DPU was flat on a quarter-on-quarter basis.

2. Positive rental reversion of 3.4%

The most recent quarter for Mapletree Logistics Trust continued to highlight the strength of the REIT’s portfolio as it managed to register a positive rental reversion of around 3.4%.

“Rental reversion” refers to the leases that were renewed/replaced during the quarter and investors should generally want the REITs they’re invested in to have higher positive rental reversions.

Meanwhile, Mapletree Logistics Trust’s weighted average lease expiry (WALE) came in at 3.4 years and over one-third of its leases are only up for renewal in FY25/26 or beyond (see below).

While around a quarter of its leases are expiring this financial year, the positive rental reversions seen in the REIT’s most recent fiscal first quarter bodes well for the remainder of the year.

MLT lease expiry profile

Source: Mapletree Logistics Trust Q1 FY22/23 earnings presentation

3. Occupancy rate stable at 96.8%

For Mapletree Logistics Trust, its sizeable portfolio that spans many countries within Asia-Pacific, saw remarkable stability during its latest quarter.

As of the end of June, the REIT had 185 properties across Singapore, Japan, Hong Kong, South Korea, China, Malaysia, Vietnam, Australia, and India.

Overall, the occupancy rate at the end of the June was 96.8%; just a smidge lower than the 96.9% recorded at the end of March.

There were slightly lower occupancy rates in Singapore, China, and South Korea during the quarter. However, this was offset by better occupancy rates in Japan and Hong Kong.

4. Ambitious sustainability targets set for 2030

With the importance of environmental, social and governance (ESG) targets in the corporate world only set to increase, REITs are also taking a proactive approach.

As for Mapletree Logistics Trust, it has set a long-term target of achieving carbon neutrality for Scope 1 and Scope 2 emissions by 2030 (see below).

MLT sustainability targets

Source: Mapletree Logistics Trust Q1 FY22/23 earnings presentation

For those unaware of “Scope” emissions, Scope 1 refers to direct emissions from company-controlled resources, such as “fugitive emissions” that include leaks of greenhouses gases (e.g., refrigeration or inefficient air-conditioning units).

Further down the scope list, Scope 2 covers indirect emissions from purchased electricity or cooling that powers properties.

So, for Mapletree Logistics Trust, committing to “carbon neutrality” in these two areas means its properties will be able to achieve a state of net-zero carbon dioxide emissions.

Essentially, it will balance out any carbon emissions in Scope 1 or 2 by removing or eliminating the same amount of emissions from the atmosphere.

In addition, targets to increase its properties’ solar-generating capacity (mainly via rooftop solar panels) should continue to enhance the efficiency and rentability of its portfolio.

Business as usual for Mapletree Logistics

Overall, it was a steady quarter for the large-cap, Asia-focused logistics REIT. Management noted that “overall leasing demand for warehouse space has stayed resilient”.

This has been supported by the usual structural drivers in Asia – domestic consumption, e-commerce and inventory stockpiling.

However, management did note that its tenants are generally cautious about capacity expansion. Yet the REIT continues to look at DPU-accretive acquisitions and asset enhancements for its current properties.

For example, Mapletree Logistics Trust is currently working on redeveloping an existing property at 51 Benoi Road in Singapore to increase the GFA by 2.3 times to 887,000 square feet.

All in all, the REIT looks like a steady name amid the universe of listed names in Singapore.

At its current price of S$1.72, Mapletree Logistics Trust units offer investors a 12-month forward dividend yield of 5.3%.

Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips owns shares of Mapletree Logistics Trust.

About the Author: Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth. He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer. In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.