THE SINGAPOREAN INVESTOR

An Analysis of Results by the Trio of Mapletree REITs for Q4 & FY2023/24

ljunyuan
Publish date: Tue, 30 Apr 2024, 10:13 AM
ljunyuan
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My name is Jun Yuan, and I am the owner of The Singaporean Investor. I am a full-time retail investor and trader since April 2017, and in this website, I'd be sharing with you my personal analyses of Singapore-listed companies, along with advices relating to investing, as well as trading. You can find out more about me here, and check out my long-term portfolio here.
An Analysis of Results by the Trio of Mapletree REITs for Q4 & FY2023/24

There are a total of 3 REITs Sponsored by Mapletree Investments Pte Ltd listed on the Singapore Exchange. All 3 of them are also constituents of the benchmark Straits Times Index (STI), they are:

  1. Mapletree Logistics Trust (SGX:M44U) – Listed since July 2005, the REIT is the first Asia-focused logistics REIT in Singapore;
  2. Mapletree Industrial Trust (SGX:ME8U) – Listed since October 2010, it invests in industrial and data centre properties in Singapore, United States, and Japan;
  3. Mapletree Pan Asia Commercial Trust (SGX:N2IU) – First listed as Mapletree Commercial Trust in April 2011, it was later renamed to Mapletree Pan Asia Commercial Trust after its merger with Mapletree North Asia Commercial Trust in August 2022. Its portfolio comprises of commercial properties (for retail and office uses) in Singapore, Hong Kong, China, Japan, and South Korea.

I am invested in all 3 of them for 3 main reasons – first is their stable financial performances over the years, second is their strong Sponsor in Mapletree Investments Pte Ltd, and third is their distribution payout frequency (they are one of the few REITs that pays out a distribution to unitholders on a quarterly basis).

The trio of Mapletree REITs have since reported their 4th quarter and full-year results ended 31 March 2024 (i.e. FY2023/24), and in this post, you will find my detailed analysis of their results, starting off with Mapletree Pan Asia Commercial Trust (which is the first Mapletree REIT to release its results on 24 April), and then Mapletree Industrial Trust (which released its results on 25 April), followed by Mapletree Industrial Trust (where the REIT released its results on 29 April).

Let’s begin:

Mapletree Pan Asia Commercial Trust (SGX:N2IU) – Results Released on 24 April 2024

Brief Introduction:

Mapletree Pan Asia Commercial Trust, or MPACT for short, invests in properties used primarily for office and/or retail purposes, as well as real estate-related assets, in key gateway markets of Asia. Currently, its portfolio comprises 18 commercial properties in the following locations – 5 in Singapore, 1 in Hong Kong, 2 in China, 9 in Japan, and 1 in South Korea valued at S$16.5 billion as at 31 March 2024.

Financial Performance (Q4 FY2022/23 vs. Q4 FY2023/24, and FY2022/23 vs. FY2023/24):

Q4 FY2022/23 vs. Q4 FY2023/24:

Q4 FY2022/23Q4 FY2023/24% Variance
Gross Revenue
(S$’mil)
$233.3m$239.2m+2.6%
Property Operating
Expenses (S$’mil)
$55.9m$56.1m+0.3%
Net Property
Income (S$’mil)
$177.4m$183.1m+3.2%
Distributable Income
to Unitholders (S$’mil)
$117.6m$120.5m+2.5%

My Observations: MPACT’s results for the 4th quarter is a stable one, with its gross revenue, net property income, and distributable income to unitholders recording a low single-digit improvement compared to the same time period last year.

Improvements in its gross revenue and net property income (by 2.6% and 3.2% respectively) was due to higher contributions from the Singapore properties (from positive contributions across all major revenue categories including fixed rent, car park income, and advertising and promotion income), offset by lower contribution from overseas properties (from unfavourable foreign exchange impact arising from the depreciating Japanese Yen and Chinese Renminbi against the Singapore Dollar, and weaker performance from the China properties as a result of lower occupancy, partially offset from higher contribution from Festival Walk as a result of higher gross turnover rent, advertising and promotion income, as well as carpark income).

Property operating expenses inched up by 0.3% due to higher staff costs and property management fees, partially offset by lower utility expenses (which was down from $9.4m in Q4 FY2022/23 to $8.5m in Q4 FY2023/24).

FY2022/23 vs. FY2023/24:

FY2022/23FY2023/24% Variance
Gross Revenue
(S$’mil)
$826.3m$958.1m+16.0%
Property Operating
Expenses (S$’mil)
$194.2m$230.2m+18.5%
Net Property
Income (S$’mil)
$631.9m$727.9m+15.2%
Distributable Income
to Unitholders (S$’mil)
$445.6m$468.6m+5.2%

My Observations: For the full-year, gross revenue and net property income were up by 16.0% and 15.2% respectively, largely due to the full-year contribution from the overseas properties acquired through the merger and higher contribution from the Singapore properties (due to positive contributions across all major revenue categories including fixed rent, car park income, and advertising and promotion income) – excluding the contribution from the overseas properties, gross revenue and net property income would have been up by just 5.4% and 4.4% respectively.

Property operating expenses were up by 18.5% mainly due to property operating expenses incurred by the overseas properties.

Finally, distributable income to unitholders was up by just 5.2%, as higher net property income was partially offset by full-year interest expenses from merger assets and acquisition debts, and elevated interest rates on existing Singapore Dollar and Hong Kong Dollar borrowings.

Portfolio Occupancy Profile (Q3 FY2023/24 vs. Q4 FY2023/24):

Q3 FY2023/24Q4 FY2023/24
Portfolio Occupancy
(%)
96.7%96.1%
Portfolio WALE
(years)
2.5 years2.4 years

My Observations: MPACT’s portfolio occupancy saw a slight dip in occupancy rate due to slight declines seen in all of its properties except VivoCity (which have seen its occupancy rate improved from 99.7% in Q3 FY2023/24 to 100.0% in Q4 FY2023/24), as well as its Japan properties (where their occupancy rates went up from 97.4% in Q3 FY2023/24 to 97.9% in Q4 FY2023/24).

Despite of that, all of its properties (except for its China properties with an occupancy rate of 89.6%) has an occupancy rate at a high of over 90%.

Rental reversion for new and/or renewed leases for the full-year at +2.9%, with positive rental reversions recorded in Singapore, as well as in South Korea. However, rental reversion for Festival Walk, its China properties, and its Japan properties were at -8.7%, -2.7%, and -1.9% respectively.

In terms of lease expiry, it is very well staggered out – for its retail leases, it has approximately 10% of leases due to renewal every single year between FY2024/25 and FY2026/27, while for its office/business park leases, it also around 10% of leases due for renewal every single year in the same time period.

Debt Profile (Q3 FY2023/24 vs. Q4 FY2023/24):

Q3 FY2023/24Q4 FY2023/24
Aggregate Leverage
(%)
40.8%40.5%
Interest Coverage
Ratio (times)
3.0x2.9x
Average Term to
Debt Maturity (years)
2.8 years3.0 years
Average Cost of
Debt (%)
3.3%3.4%
% of Borrowings Hedged
to Fixed Rates (%)
85%77%

My Observations: Compared to the previous quarter, its debt profile weakened slightly – particularly, its interest coverage ratio continued its downward decline to 2.9x, along with its average cost of debt inching up by another 0.1 percentage point (pp) to 3.4%, and a decline in its percentage of borrowings hedged to fixed rates (to 77%).

On the other hand, its aggregate leverage improved by 0.3pp to 40.5% – which is a healthy level to the regulatory limit of 50.0%.

Finally, in terms of debt maturities, over the next couple of financial years, it has 15% of borrowings due for refinancing in FY2024/25, 21% in FY2025/26, 21% in FY2026/27, with the remaining 43% due only in FY2027/28 or later.

Distribution Payout to Unitholders

For Q4 FY2023/24, a distribution payout of 2.29 cents/unit was declared – compared to its payout of 2.25 cents/unit last year, this represented a slight 1.8% improvement – which can be attributed to stronger performances in its Singapore properties, as well as stable contribution from Festival Walk.

If you are a unitholder of MPACT, do take note of the following regarding its distribution payout:

Ex-Date: 02 May 2024
Record Date: 03 May 2024
Payout Date: 06 June 2024

Together with its payout of 2.18 cents/unit for Q1, 2.24 cents/unit for Q2, and 2.20 cents/unit for Q3, the commercial REIT’s full-year payout amounts to 8.91 cents/unit – a decline by 7.3% compared to its payout of 9.61 cents/unit in FY2022/23 due to full-year impact of higher utility costs, higher interest rates, and forex impact from a stronger Singapore Dollar against all foreign currencies, as well as higher weighted average number of units for the current financial year under review.

CEO Ms Sharon Lim’s Comments & Outlook:

“MPACT has maintained its course amidst a tough operating landscape. The uplift across gross revenue, NPI and DPU for 4Q FY23/24 underscores our operational resilience and adaptability. Despite the bumpy road ahead, we draw confidence from several key indicators of stability: a yearly increase in our portfolio committed occupancy to 96.1% and a positive rental reversion of 2.9%. VivoCity, our flagship asset, has showcased all-rounded excellence, achieving a new record in full-year tenant sales and leading our portfolio with an outstanding 14.0% rental uplift.

We are set to navigate the future with agility. Beyond our ongoing commitment to active asset management, we are poised to seize strategic opportunities to refine our capital structure, emphasising a dynamic approach to portfolio management. Additionally, we will continue to pursue initiatives aimed at safeguarding and enhancing long-term unitholder value. Our Singapore assets have consistently delivered. With this market's inherent stability, it will remain a significant component of our AUM and NPI, reinforcing MPACT's foundational strength."

Mapletree Industrial Trust (SGX:ME8U) – Results Related on 25 April 2024:

Brief Introduction:

Mapletree Industrial Trust, or MINT for short, invests in real estate properties used primarily for industrial purposes (including hi-tech buildings, business park buildings, flatted factories, stack-up/ramp-up buildings, and light industrial buildings) in Singapore, as well as data centres worldwide beyond Singapore, as well as real estate-related assets. Currently, its portfolio comprises 83 properties in Singapore, 56 properties in North America (including 13 data centres held through the joint venture with Mapletree Investments Pte Ltd), and 1 property in Japan with its total assets under management at S$8.9 billion as at 31 March 2024.

Financial Performance (Q4 FY2022/23 vs. Q4 FY2023/24, and FY2022/23 vs. FY2023/24):

Q4 FY2022/23 vs. Q4 FY2023/24:

Q4 FY2022/23Q4 FY2023/24% Variance
Gross Revenue
(S$’mil)
$171.1m$178.7m+4.4%
Property Operating
Expenses (S$’mil)
$42.2m$46.9m+11.2%
Net Property
Income (S$’mil)
$128.9m$113.8m+2.2%
Distributable Income
to Unitholders (S$’mil)
$87.2m$95.6m+9.6%

My Observations: Overall, it was a very good quarter for the REIT in my opinion, with its gross revenue, net property income, and distributable income to unitholders all growing at a single-digit percentage.

The 4.4% improvement in its gross revenue was due to the contribution from the newly acquired data centre in Osaka, Japan, and new leases at the redeveloped property at Mapletree Hi-Tech Park @ Kallang Way, partly offset by the loss of income from non-renewal of leases.

As property operating expenses spiked by 11.2%, net property income grew at just 2.2%.

Finally, the 9.6% increase in its distributable income to unitholders was mainly due to higher net property income, and higher distribution from joint venture (Mapletree Rosewood Data Centre Trust).

FY2022/23 vs. FY2023/24:

FY2022/23FY2023/24% Variance
Gross Revenue
(S$’mil)
$684.9m$697.3m+1.8%
Property Operating
Expenses (S$’mil)
$166.9m$176.3m+5.6%
Net Property
Income (S$’mil)
$518.0m$521.0m+0.6%
Distributable Income
to Unitholders (S$’mil)
$356.6m$375.1m+5.2%

My Observations: On a full-year basis, its gross revenue inched up by 1.8% due to the completion of Mapletree Hi-Tech Park @ Kallang Way, contribution from the newly acquired data centre in Osaka, Japan, and new leases and renewals across the group’s portfolio. However, this was offset by non-renewal of leases, and the weakening of the USD (against the SGD).

As a result of a bigger percentage increase in its property operating expenses (by 5.6%, compared to just 1.8% improvement in its gross revenue) due to higher property maintenance expenses, property taxes, and marketing costs, the REIT’s net property income inched up by just 0.6%.

The REIT’s distributable income to unitholders went up by 5.2% mainly due to higher net property income and higher distribution declared by joint venture (Mapletree Rosewood Data Centre Trust). However, this was partially offset by higher borrowing costs (which were attributed to the higher interest rate environment and additional interest incurred in relation to the REIT’s acquisition of a data centre in Japan in May 2023).

Portfolio Occupancy Profile (Q3 FY2023/24 vs. Q4 FY2023/24):

Q3 FY2023/24Q4 FY2023/24
Portfolio Occupancy
(%)
92.6%91.4%
Portfolio WALE (by
Gross Rental Income – years)
4.40 years4.40 years

My Observations: Overall occupancy of Mapletree Industrial Trust’s properties saw a slight 1.2pp decline to 91.4% due to a slight dip in all of its properties except for its hi-tech buildings (which saw its occupancy rates up from 87.6% in Q3 FY2023/24 to 88.6% in Q4 FY2023/24).

However, positive rental reversions of about +6.6% was recorded for new and/or renewed leases across all property types in Singapore. For its North America portfolio, average rental rates also rose from US$2.43 psf/month recorded in Q3 FY2023/24 to US$2.51 psf/month for the current quarter under review.

In terms of lease expiries in the financial years ahead, it is well-staggered where, between FY2024/25 and FY2027/28 (a period of 4 years), it has an average of 16.3% of leases due for renewal each year, with the remaining 34.8% of the leases expiring only in FY2028/29 or later.

Debt Profile (Q3 FY2023/24 vs. Q4 FY2023/24):

Q3 FY2023/24Q4 FY2023/24
Aggregate Leverage
(%)
38.6%38.7%
Interest Coverage
Ratio (times)
4.7x4.5x
Average Term to
Debt Maturity (years)
3.4 years3.8 years
Average Cost of
Debt (%)
3.1%3.1%
% of Borrowings Hedged
to Fixed Rates (%)
79.5%84.6%

My Observations: Despite a slight 0.1pp increase in the REIT’s aggregate leverage, at 38.7%, it is still a very safe distance to the regulatory limit of 50.0%.

One thing to note about its average cost of debt that I've noticed over the recent quarters is that, it has been on a slow decline since hitting a high of 3.5% in Q4 FY2022/23, to 3.1% in Q4 FY2023/24.

Another plus point to note is that the REIT has further improved its percentage of borrowings hedged to fixed rates by another 5.1pp to 84.6%, which helps to contain the impact or fluctuating interest rates on distributions.

Last but not least, in terms of its debt maturity, in the coming financial year FY2024/25 ahead, it only has 2.5% (or S$75.0m) of borrowings due for refinancing. In FY2025/26, FY2026/27, FY2027/28, it has 19.9% (or S$592.8m), 21.7% (or S$646.7m), and 26.9% (or S$802.7m) of borrowings due for refinancing each year. The remaining 29% (or S$395.3m) of borrowings will only be due for refinancing in FY2030/31 or later.

Distribution Payout to Unitholders:

For Q4 FY2023/24, a distribution payout of 3.36 cents/unit was declared – compared to its payout of 3.33 cents/unit last year, it edged up slightly by 0.9% – the growth was a much lower one compared to its distributable income to unitholders due to an enlarged unit base.

If you are a unitholder of MINT, do take note of the following dates on its distribution payout:

Ex-Date: 03 May 2024
Record Date: 06 May 2024
Payout Date: 10 June 2024

Together with its payout of 10.07 cents/unit declared for the first 3 quarters of the current financial year (3.39 cents/unit in Q1, 3.32 cents/unit in Q2, and 3.36 cents/unit in Q3), MINT’s payout for FY2023/24 amounts to 13.43 cents/unit – compared to its payout of 13.57 cents/unit last year, it represented a very small 1.0% decline.

CEO Mr Tham Kuo Wei's Comments and Outlook:

“FY23/24 was a challenging year characterised by macroeconomic uncertainties and headwinds from higher operating expenses and borrowing costs. MIT remained resilient, strengthened its portfolio with its maiden data centre acquisition in Japan, and unlocked value through the divestment of its Tanglin Halt Cluster. MIT will remain focused on pursuing accretive acquisitions and developments as well as selective divestments of non-core assets to deliver sustainable returns to our Unitholders.”

Mapletree Logistics Trust (SGX:M44U) – Results Released on 29 April 2024

Brief Introduction:

Mapletree Logistics Trust, or MLT for short, invests in logistics real estate and real estate-related assets. Currently, its portfolio comprises 187 properties in Singapore, Australia, China, Hong Kong, India, Japan, Malaysia, South Korea, and Vietnam with assets under management of S$13.2 billion as at 31 March 2024.

Financial Performance (Q4 FY2022/23 vs. Q4 FY2023/24, and FY2022/23 vs. FY2023/24):

Q4 FY2022/23 vs. Q4 FY2023/24:

Q4 FY2022/23Q4 FY2023/24% Variance
Gross Revenue
(S$’mil)
$178.9m$181.0m+1.2%
Property Operating
Expenses (S$’mil)
$24.6m$25.7m+4.5%
Net Property
Income (S$’mil)
$154.3m$155.3m+0.6%
Distributable Income
to Unitholders (S$’mil)
$109.2m$110.4m+1.1%

My Observations: For the 4th quarter, Mapletree Logistics Trust’s financial performance (in terms of its gross revenue, net property income, and distributable income to unitholders) inched up slightly.

The 1.2% improvement in the REIT’s gross revenue was mainly due to higher contribution from existing properties in Singapore and Hong Kong, along with contributions from acquisitions in Japan, South Korea, and Australia completed in Q1 FY2023/24, partially offset by lower contribution from existing properties mainly in China, and absence of revenue contribution from divested properties (9 in total – with 3 in Singapore, 5 in Malaysia, and 1 in Japan), as well as weaker Japanese Yen, Chinese Yuan, Malaysian Ringgit, and South Korean Won against the strong Singapore Dollar – however, this was partially mitigated through the use of foreign currency forward contracts to hedge foreign-sourced income distributions.

As property operating expenses went up by 4.5% (due to contributions from acquisitions completed in Q1 FY2023/24, and increase in property tax and maintenance expenses), its net property income only inched up by just 0.6%.

FY2022/23 vs. FY2023/24:

FY2022/23FY2023/24% Variance
Gross Revenue
(S$’mil)
$730.6m$733.9m+0.4%
Property Operating
Expenses (S$’mil)
$95.9m$98.9m+3.2%
Net Property
Income (S$’mil)
$634.8m$634.9m+0.0%
Distributable Income
to Unitholders (S$’mil)
$432.9m$447.1m+3.3%

My Observations: Similar to its 4th quarter financial performance, for the full year, the REIT managed slight gains in its gross revenue and distributable income to unitholders.

Gross revenue inched up by 0.4% mainly due to higher contribution from existing properties in Singapore and Hong Kong, and contributions in Japan, South Korea, and Australia completed in Q1 FY2023/24. However, this was partially offset by the absence of revenue contribution from divested properties and properties under redevelopment, and lower contribution from existing properties mainly in China, as well as depreciation of various currencies (including the Chinese Yuan, Japanese Yen, Australian Dollar, Hong Kong Dollar, and Malaysian Ringgit) against the Singapore Dollar – however, this was partially mitigated through the use of foreign currency forward contracts to hedged the foreign-sourced income distributions.

Property operating expenses was up by 3.2% mainly due to contribution from acquisitions completed in Q1 FY2023/24, higher property tax and maintenance expenses. This led to its net property income more or less the same as last year.

Portfolio Occupancy Profile (Q3 FY2023/24 vs. Q4 FY2023/24):

Q3 FY2023/24Q4 FY2023/24
Portfolio Occupancy
(%)
95.9%96.0%
Rental Reversion
(%)
+3.8%+2.7%
Portfolio WALE
(by NLA – years)
2.9 years3.0 years

My Observations: Portfolio occupancy profile improved slightly compared to last year, with the 0.1pp improvement in its portfolio occupancy rate attributable to growth in the portfolio occupancies in China (up from 93.1% in Q3 FY2023/24 to 93.2% in Q4 FY2023/24), as well as in Malaysia (up from 96.5% to 98.6%). On the other hand, slight dips were seen in the portfolio occupancies of its properties in Singapore (down from 96.7% in Q3 FY2023/24 to 96.6% in Q4 FY2023/24) as well as in Australia (down from 100.0% in Q3 FY2023/24 to 99.2% in Q4 FY2023/24).

That said, the portfolio occupancy rate of its properties in all but 1 of the 9 different geographical locations are above 95% (the only exception was the occupancy rate of the properties in China, which was at 93.2%), which I consider to be very strong.

Rental reversion for new and/or renewed leases for the quarter continues to remain at a positive percentage (which is good to note), even though its slightly lower compared to the previous quarter – however, excluding China, its rental reversion would have been much better, at +7.1%.

In terms of its lease expiry in FY2024/25, FY2025/26, FY2026/27, they are at 29.6%, 22.2%, and 19.1% respectively. The remaining 29.1% of the leases will be expiring only in FY2027/28 or later.

Debt Profile (Q3 FY2023/24 vs. Q4 FY2023/24):

Q3 FY2023/24Q4 FY2023/24
Aggregate Leverage
(%)
38.8%38.9%
Interest Coverage
Ratio (times)
3.7x3.7x
Average Term to
Debt Maturity (years)
3.7 years3.8 years
Average Cost of
Debt (%)
2.5%2.7%
% of Borrowings Hedged
to Fixed Rates (%)
83%84%

My Observations: Even though its aggregate leverage have edged up slightly, but in my opinion, at 38.9%, it is still at a very healthy level.

In terms of debt maturity, it only has 5% (or S$275m) of borrowings due for refinancing in the coming FY2024/25 (to which it has more than ample committed credit facilities of S$950m to refinance). Between FY2025/26 and FY2028/29, it has an average of 18% of borrowings per year due for refinancing (which I consider to be very well-spread out). The remaining 23% of borrowings are only due for refinancing in FY2029/30 or later.

Distribution Payout to Unitholders:

For Q4 FY2023/24, the management of MLT have declared a distribution payout of 2.211 cents/unit – compared to its payout of 2.502 cents/unit declared in Q4 FY2022/23, it represented a 2.5% decline, due to a larger unit base.

If you are a unitholder of the logistics REIT, do take note of the following dates on its distribution payout:

Ex-Date: 07 May 2024
Record Date: 08 May 2024
Payout Date: 26 June 2024

Similar to the previous quarter, distribution reinvestment plan will be applied to this quarter’s distribution payout – you will receive more details shortly.

Together with distribution payout of 2.271 cents/unit in Q1, 2.268 cents/unit in Q2, and 2.253 cents/unit in Q3, its total payout for FY2023/24 amounts to 9.003 cents/unit – compared to its payout of 9.011 cents/unit in FY2022/23, it represented a very small 0.1% dip.

CEO Ms Ng Kiat's Comments and Outlook:

"At the operating level, MLT's portfolio continues to be resilient, achieving a healthy portfolio occupancy of 96% and positive rental reversions. However, high borrowing costs, weak regional currencies and the challenging leasing environment in China have impacted our performance, and will remain headwinds going forward. We will stay vigilant and nimble in navigating these challenges, while driving our portfolio rejuvenation strategy to strengthen MLT's resilience."

Closing Thoughts

To round up, here is a summary of the results posted by the 3 Mapletree REITs:

Mapletree Pan Asia Commercial Trust:

Financial Performance:

Q4: Stable performance contributed by its SG properties, with gross revenue and net property income up by 2.6% and 3.2% respectively; While Festival Walk saw a higher contribution compared to last year (a positive), but the 2 China properties still saw lower contributions due to lower occupancy, and a weaker RMB.

FY2023/24: Gross revenue and net property income were up by 16.0% and 15.2%, contributed by the overseas properties included in MPACT’s portfolio as a result of the merger; without the overseas properties, gross revenue and net property income would have been up by 5.4% and 4.4% respectively.

Portfolio Occupancy:

  • Slight dip in occupancy rate compared to Q3 FY2023/24 at 96.1%. However, apart from its China properties, all its other properties have their occupancy rates at over 90%.
  • Rental reversion at +2.9%, and lease expiries were well-staggered with about 10% of retail leases and 10% of office/business park leases due for renewal each year.

Debt Profile:

Aggregate leverage, at 40.5%, is a safe distance to the regulatory level of 50%. However, its interest coverage ratio, at 2.9x, is inching close to the 2.5x limit – more importantly, its interest coverage ratio has been on a downward descend since Q1 FY2022/23, when it was at a high of 4.9x.

DPU:

Q4: 1.8% increase can be attributed to stronger performance from its SG properties, and stable contribution from Festival Walk.

FY2023/24: Down by 7.3% due to higher utilities expense, higher interest rates, forex impact from a stronger SGD against all foreign currencies, as well as a larger unit base.

Mapletree Industrial Trust:

Financial Performance:

Q4: Gross revenue and net property income grew by a single-digit percentage due to contribution from newly acquired data centre in Osaka, Japan, as well as new leases at the newly redeveloped property at Mapletree Hi-Tech Park @ Kallang Way; Distributable income to unitholders also saw an improvement due to higher net property income and higher distribution from joint venture.

FY2023/24: Gross revenue and net property income inched up by 1.8% and 0.6% respectively, attributed to contribution from the newly acquired data centre in Osaka, Japan, and completion of Mapltree Hi-Tech Park @ Kallang Way; Together with a higher distribution by joint venture, its distributable income to unitholders went up by 5.2%.

Portfolio Occupancy:

  • Occupancy rates in all but its high-tech buildings (which improved by 1.0pp to 88.6%), hence its overall portfolio occupancy dipped slightly to 91.4% (but still considered strong in my opinion).
  • Positive rental reversion recorded for new and/or renewed leases for its Singapore properties, as well as those in North America.
  • Lease expiries well-staggered, with approximately 16.3% of leases due for renewal each year over the next 4 financial years.

Debt Profile:

  • Aggregate leverage at 38.7% a healthy level
  • Noted that its cost of debt has been on a gradual decline since hitting a high of 3.5% in Q4 FY2022/23, to 3.1% in Q4 FY2023/34
  • Percentage of borrowings hedged to fixed rates have also gone up by another 5.1pp to 84.6%.

DPU:

Q4: Up by 0.9% to 3.36 cents/unit

FY2023/24: Slight decline of just 1.0% to 13.43 cents/unit

Mapletree Logistics Trust:

Financial Performance:

Q4: Gross revenue, net property income, and distributable income inched up by 1.2%, 0.6%, and 1.1% respectively. Growth contributed by contributions from existing properties in Singapore and Hong Kong, as well as from newly acquired properties in Q1 FY2023/24. However, this was offset by lower contribution from properties in China, absence of revenue contribution from divested properties, and unfavourable foreign exchange against the strong SGD.

FY2023/24: Gross revenue inched up by 0.4% mainly due to contributions from existing properties in Singapore and Hong Kong, along with contributions from newly acquired properties in Q1 FY2023/24. However, this was offset by lower contribution mainly from existing properties in China, and weaker foreign exchange against the SGD. Together with a higher % growth in its property operating expenses, its net property income was more or less the same as last year (at S$634.9m).

Portfolio Occupancy:

  • Saw a slight improvement to 96.0% on a portfolio level, with portfolio occupancy rates of properties in 8 out of 9 countries at above 95%, with lease expiry well staggered over the next few years.
  • Positive rental reversions reported for new and/or renewed leases at +2.7%.

Debt Profile:

  • Aggregate leverage at a healthy level of 38.9%, with 84% of borrowings hedged at fixed rates (which is a pretty high level).
  • In FY2024/25, it only has 5% of borrowings due for refinancing, and over the next 4 financial years thereafter, it has an average of 18% of borrowings each year due for refinancing (which I consider to be well-spread out)

DPU:

Q4: Declined by 2.5% to 2.211 cents/unit due to a larger unit base.

FY2023/24: Dipped by 0.1% to 9.003 cents/unit

In terms of the financial performance of the Mapletree REITs (both for the 4th quarter, as well as for the full year), I would say they have grew at a stable pace (with contributions from existing and newly acquired properties contributed to its gross revenue growth, partially offset by a weaker foreign currency against the Singapore dollar).

As far as the portfolio occupancy profile of the 3 REITs goes, I would say they have been maintained at a high level of above 90%, recorded a positive rental reversion for new and/or renewed leases, and at the same time, having a well-staggered out lease expiry over the next few years.

Debt profile for all 3 of them continues to remain at a healthy level (apart from Mapletree Pan Asia Commercial Trust which have its aggregate leverage at 40.5%, the other 2 Mapletree REITs have their aggregate leverage at around the 38+% level). They also have a high percentage of borrowings hedged at fixed rates (for Mapletree Pan Asia Commercial Trust, it is at 77%, and for the other 2 Mapletree REITs, it is at 80+%), and at the same time, having a well-spread out debt maturity profile.

Finally, looking at their distribution payouts, both Mapletree Pan Asia Commercial Trust and Mapletree Industrial Trust saw a slight increase in the 4th quarter, while for the full-year, all 3 of them saw a decline (with Mapletree Pan Asia Commercial Trust’s distribution per unit declining the most among the 3 Mapletree REITs, by 7.3%).

Looking at FY2024/25 ahead, my opinion is that the REITs will continue to remain prudent as interest rates are still at a high level, and as such, the number of acquisition activities are likely to remain subdued. Coupled with higher financing costs, it is likely that its distribution payout for the full year be the same as the payout for the current financial year under review, or a slight decline.

With that, I have come to the end of my review of the 4th quarter, and full year results of the 3 Mapletree REITs. Please note that all the opinions above are for educational purposes only, and they are not meant as any buy or sell calls for any of them. You are strongly advised to do your own due diligence before making any investment decisions.

Related Documents

Mapletree Pan Asia Commercial Trust:

Mapletree Industrial Trust:

Mapletree Logistics Trust:

Disclaimer: At the time of writing, I am a unitholder of all 3 Mapletree REITs.

The post An Analysis of Results by the Trio of Mapletree REITs for Q4 & FY2023/24 first appeared on The Singaporean Investor.

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