Earnings season is here once again – and over the next couple of weeks, companies will be releasing their financial results/business updates for the quarter ended 30 June 2022, and just like in the previous quarters, I will also be posting updates of results of the companies I am invested in as and when they are made available (you can check out a list of companies I have invested in here.)

The first company in my investment portfolio to release its financial results this time round is Mapletree Logistics Trust (SGX:M44U) – with the blue-chip REIT making available its financial results for the first quarter of the financial year 202/23 after market hours yesterday evening (21 July 2022.)

A brief introduction about the REIT for those who are unfamiliar with it – listed on the Singapore stock exchange since 2005, Mapletree Logistics Trust invests in logistics properties in various geographical locations, such as Singapore, Hong Kong, Japan, China, Australia, South Korea, Malaysia, Vietnam, and India. The REIT is also one of the constituents in Singapore’s benchmark Straits Times Index (STI) since 23 December 2019.

Now, let us take a look at the REIT’s latest set of financial results, portfolio occupancy and debt profile, and distribution payout for the quarter under review (the REIT is one of the few Singapore-listed REITs that have continued to declare a distribution payout to its unitholders every quarter):

Financial Performance (Q1 FY2021/22 vs. Q1 FY2022/23)

The following table is a comparison of the REIT’s results for the current quarter under review (i.e. Q1 FY2022/23 ended 30 June 2022) against that in the same time period last year (i.e. Q1 FY2021/22 ended 30 June 2021):

Its good to see the REIT recording double-digit percentage improvements in its top- and bottom-line once again – the 14.6% and 13.2% quarter-on-quarter (q-o-q) growth in its gross revenue and net property income respectively can be attributed to higher revenue from existing properties, along with contributions from the newly acquired properties in China, South Korea, Japan, Vietnam, Malaysia, and Australia in 1Q FY2022/23, as well as in the previous financial year 2021/22.

The 24.8% jump in its property operating expenses was due to expenses incurred by the newly acquired properties, along with higher property and land tax.

Portfolio Occupancy Profile (Q4 FY2021/22 vs. Q1 FY2022/23)

Moving on, let us take a look at the REIT’s portfolio occupancy profile – where I tend to compare the statistics recorded for the current quarter under review against that recorded in the previous quarter 3 months ago to find out whether it has continued to remain resilient.

The following table is my comparison of Mapletree Logistics Trust’s portfolio occupancy profile for the current quarter under review (i.e. Q1 FY2022/23 ended 30 June 2023) compared against the previous quarter (i.e. Q4 FY2021/22 ended 31 March 2022):

My Observations: In my personal opinion, the REIT’s portfolio occupancy profile is a very strong one – what I like about the statistics is its ability to record a positive rental reversion for new and/or existing leases despite the headwinds.

As far as portfolio occupancy is concerned, improvements are recorded for properties in Japan (up from 98.4% in Q4 FY2021/22 to 99.2% in Q1 FY2022/23), Hong Kong (up from 99.9% in Q4 FY2021/22 to full occupancy in Q1 FY2022/23), while slight declines are recorded for properties in Singapore (down from 99.0% in Q4 FY2021/22 to 98.3% in Q1 FY2022/23 – the occupancy rate excludes 51 Benoi Read which is being decanted for redevelopment), South Korea (down from 98.2% in Q4 FY2021/22 to 98.0% in Q1 FY2022/23), and in China (down from 93.1% in Q4 FY2021/22 to 92.9% in Q1 FY2022/23.)

Finally, in terms of lease expiries, there are well-staggered over the next couple of financial years ahead – with 24.2% of the leases expiring in the remaining quarters of the current financial year 2022/23, 21.8% of the leases expiring in the next financial year 2023/24, 18.3% of the leases expiring in FY2024/25, and the remaining 35.7% of the leases expiring only in FY2025/26 and beyond.

Debt Profile (Q4 FY2021/22 vs. Q1 FY2022/23)

Just like how I have reviewed the REIT’s portfolio occupancy profile in the previous section, I will also be reviewing its debt profile in a similar manner – which is by comparing the statistics reported in the current quarter under review (i.e. Q1 FY2022/23 ended 30 June 2022) against that reported in the previous quarter 3 months ago (i.e. Q4 FY2021/22 ended 31 March 2022) to find out whether or not it has continued to remain healthy:

My Observations: Aggregate leverage edged up slightly (by 0.4 percentage points) to 37.2% due to an increase in total debt outstanding by S$78m mainly due to net debt drawn of S$200m largely due to fund acquisitions in South Korea and China. Despite of that, its aggregate leverage is still a good distance away from the regulatory level of 50.0%, meaning there is still plenty of debt headroom for the REIT to embark on further yield-accretive acquisitions.

As far as the REIT’s debt maturity is concerned, for the remaining quarters of FY2022/23, S$460m (or 9% of its total debt) will be maturing – but there are sufficient available committed facilities (of S$848m) to finance this debt, so no issues there.

Also, as at 30 June 2022, 80% of its total debt (which is a very high percentage) is hedged or drawn in fixed rates, hence any possible risks relating to interest rate hikes is well mitigated in my opinion.

Distribution Payout to Unitholders (Q1 FY2021/22 vs. Q1 FY2022/23)

Finally, let us take a look at the REIT’s distribution payout this time round (i.e. Q1 FY2022/23), compared to that declared in the same time period one year ago (i.e. Q1 FY2021/22)

Distribution payout to unitholders went up by 5.0% on a q-o-q basis to 2.268 cents/unit – in case you’re wondering why the distributable income to unitholders went up by 17.2%, but distribution per unit only went up by 5.0%, that’s because of an enlarged unit base following the placement in Q4 FY2020/21.

Here are some of the important dates regarding the distribution payout to take note of (if you are a unitholder of the REIT):

Ex-Date: 28 July 2022
Record Date: 29 July 2022
Payout Date: 09 September 2022

Closing Thoughts

On the whole, I’m sure you’ll agree with me that the latest set of results reported by the blue-chip logistics REIT is a pretty decent one – with the double-digit improvements in its top- and bottom-line, portfolio occupancy profile remaining very resilient (with properties in all the geographical locations the REIT is in having an occupancy rate of more than 90.0%), and also a very healthy debt profile (with its aggregate leverage a good distance away from the regulatory level of 50.0%, and also the fact that 80.0% of its debt being hedged at fixed rates provides a good “protection” against headwinds posed by interest rate hikes.)

Before I end my review, I’d like to address concerns that you may have regarding the lower percentage growth in its distribution payout to unitholders (compared to the percentage growth in its distributable income to unitholders) due to an enlarged unit base – in my opinion, this is something that unitholders of Singapore-listed REITs will have to accept, as they need to distribute 90.0% of its earnings as distributions to qualify for tax exemptions. As such, if they need to embark on any acquisitions, then they’ll need to either take on more debt (through borrowings), issue perps, or conduct equity fund raising – with the latter 2 causing a certain degree of dilution as far as distribution payouts are concerned.

With that, I have come to the end of my review on Mapletree Logistics Trust’s latest results release for Q1 FY2022/23. Do note that all the opinions you have read about in this post are purely my own to share, and they do not constitute any buy or sell calls for the REIT’s units. You should always do your own due diligence before you make any investment decisions.

Related Documents

• Press Release
• Financial Statements
• Presentation Slides

Disclaimer: At the time of writing, I am a unitholder of Mapletree Logistics Trust.