Company Reports

Mapletree Logistics Trust’s fiscal 2024 (ending March) results aligned with our expectations. The trust’s full-year distribution per unit was down 0.1% year on year as higher contributions from existing properties and acquired properties were offset by currency headwinds, weakness in its China-based operations, and a higher borrowing cost.

Mapletree Logistics Trust is a real estate investment trust focusing on income-producing logistics properties in the Asia-Pacific. Most of the trust’s properties are strategically located with good access to key transport networks. The trust’s property portfolio is of good quality, in our view, and well positioned to fill the gap of the limited supply of modern logistics spaces in Asia-Pacific. At the same time, the markets that MLT operate in benefit from strong secular tailwinds of e-commerce adoption and increasing middle-class consumption, driving leasing demand for its warehouses. Since its IPO, the manager has increased the trust’s assets under management and distribution per unit by using a mixture of leasing, asset-enhancement initiatives, or AEIs, and capital recycling.

Mapletree Logistics Trust’s, or MLT’s, third-quarter fiscal 2024 (ending March) results were in line with our expectations. Net property income rose 1.5% year on year on the back of a 2.1% year-on-year growth in revenue. The growth is largely driven by organic growth of existing properties and contribution of new acquisitions, partly offset by lower contribution from China, divested assets, properties under redevelopment, and the appreciation of the Singapore dollar. With no major surprises, we maintain our fair value estimate of SGD 1.60 per unit. Based on the last closing of SGD 1.63, we think the trust is fairly valued and encourage investors to wait for a better entry price.

Mapletree Logistics Trust’s first-half fiscal 2024 (ending March) revenue fell 0.7% year over year to SGD 369 million, and net property income fell 1.0% to SGD 320 million. These figures both made up about 48% of our full-year estimates, slightly below our expectations due to persistent currency headwinds and weaker performance from the China portfolio. We lowered our fair value estimate to SGD 1.60 per unit from SGD 1.66 after reducing our rental growth assumption for the China portfolio and updating our foreign-exchange assumptions. However, we increased our distribution per unit forecast for fiscal 2024, 2025, and 2026 by 2%, 4%, and 3%, respectively, after factoring in the distribution of divestment gains. Based on the trust’s last closing price of SGD 1.47, we think the units are slightly undervalued. They trade at a fiscal 2024 dividend yield of 6.1%.

Mapletree Logistics Trust is a real estate investment trust focusing on income-producing logistics properties in the Asia-Pacific. Most of the trust’s properties are strategically located with good access to key transport networks. The trust’s property portfolio is of good quality, in our view, and well positioned to fill the gap of the limited supply of modern logistics spaces in Asia-Pacific. At the same time, the markets that MLT operate in benefit from strong secular tailwinds of e-commerce adoption and growing middle-class consumption, driving leasing demand for its warehouses. Since its IPO, the manager has grown the trust’s assets under management and distribution per unit by using a mixture of leasing, asset-enhancement initiatives, or AEIs, and capital recycling.

Sabana REIT’s unitholders have voted to remove ESR Group as its manager and internalize the REIT management function. This move is unprecedented in Singapore, but we think it has positive implications for the industry. This event occurred because activist investor Quarz Capital led the push. As ESR Group holds around 21% of Sabana REIT compared with Quarz Capital’s 14%, ESR Group only held a slight advantage going into the vote. Ultimately, we think ESR Group lost the vote because of concerns about potential conflicts of interest—ESR Group is the sponsor of more than one industrial REIT in Singapore—and the perception that Sabana REIT has underperformed its peers due to poor management by ESR Group.

Mapletree Logistics Trust’s Japan and South Korea acquisitions helped the trust to reverse three consecutive quarters of revenue and net property income decline, and to post a positive quarter-on-quarter growth of 1.8% and 2.5%, respectively, in first-quarter fiscal 2024 (ending March). Distribution per unit, or DPU, was also up 0.1% quarter on quarter to SGD 0.02271 per unit after the trust topped up its distribution from a write back on a previous capital gain tax provision. As the results were in line with our expectations, we retain our fair value estimate of SGD 1.66. We think the trust is fairly valued currently as it trades at a fiscal 2024 dividend yield of 5.2% and encourage investors to wait for a better entry point. Looking ahead, we expect contributions from its newly acquired Japan, South Korea, and Australia assets to drive near-term growth and offset some of its currency and interest rate headwinds. However, we also expect the trust’s China portfolio, especially in tier 2 cities, to drag on its leasing performance, given weakness in the overall China economy.

Mapletree Logistics Trust, or MLT, is a real estate investment trust focusing on income-producing logistics properties in the Asia-Pacific. Most of the trust’s properties are strategically located with good access to key transport networks. The trust’s property portfolio is of good quality, in our view, and well positioned to fill the gap of the limited supply of modern logistics spaces in Asia-Pacific. At the same time, the markets that MLT operate in benefit from strong secular tailwinds of e-commerce adoption and growing middle class consumption driving leasing demand for its warehouses. Since IPO, the manager has grown the trust’s assets under management and distribution per unit by using a mixture of leasing, asset enhancement initiatives, or AEIs, and capital recycling.

Mapletree Logistics Trust continues to face currency headwinds, with its fourth-quarter fiscal 2023 (ending March) revenue and net property income declining for the third consecutive quarter by 0.7% and 1.8% respectively, on a quarter-on-quarter basis. However, distribution per unit grew 1.8% quarter on quarter due to partial distribution of the gains from the divestment of 3 Changi South Lane. As the results were in line with our expectations, we retain our fair value estimate of SGD 1.66, after rolling forward our model and fine-tuning our assumptions. We expect fiscal 2024’s DPU to decline 3% year on year to SGD 0.0861 due to continued currency headwinds, higher cost of borrowing, and weaker leasing performance for its China portfolio. This implies a fiscal 2024 dividend yield of 4.9% based on its last closing price of SGD 1.75. In our view, the trust is fairly valued presently, and we encourage investors to wait for a better entry point.

Mapletree Logistics Trust, or MLT, is a real estate investment trust focusing on income-producing logistics properties in the Asia-Pacific. Most of the trust’s properties are strategically located with good access to key transport networks. The trust’s property portfolio is of good quality, in our view, and well positioned to fill the gap of the limited supply of modern logistics spaces in Asia-Pacific. At the same time, the markets that MLT operate in benefit from strong secular tailwinds of e-commerce adoption and growing middle class consumption driving leasing demand for its warehouses. Since IPO, the manager has grown the trust’s assets under management and distribution per unit by using a mixture of leasing, asset enhancement initiatives, or AEIs, and capital recycling.

No-moat Mapletree Logistics Trust, or MLT, is acquiring a portfolio of logistics assets for a total acquisition cost of SGD 947 million. The portfolio comprises six properties in Japan and one property each in Australia and South Korea. We are largely positive on this transaction, given that the assets are located in attractive logistics markets with favorable market demand and supply dynamics. We also like that the Australian and South Korean assets have in-built annual rental escalation of 3% and 1.5%, respectively, while the existing leases in Japan and Australia are below current market rents by 3% to 10%, based on the company’s guidance. We think that this will support long-term organic rental growth for the trust.

Mapletree Logistics Trust's third-quarter fiscal 2023 (ending March) revenue and net property income, or NPI, declined for a second consecutive quarter due to currency headwinds and higher borrowing cost driven by rising interest rates. As a result, revenue and NPI declined 2% and 1.8% quarter on quarter, respectively, while third-quarter fiscal 2023 distribution per unit, or DPU, fell 0.9% quarter on quarter to SGD 2.227 cents. Management expects the currency headwind to persist for another three quarters and cost of borrowing to rise by another 40 basis points by fiscal 2024. We are not surprised by this set of results as we flagged our concerns earlier that the strong Singapore dollar and rising interest rates will erode the firm’s DPU growth in the near term. Hence, we maintain no-moat Mapletree’s fair value estimate at SGD 1.66. In our view, the trust is fairly valued presently, and we encourage investors to wait for a better entry point.

Mapletree Logistics Trust, or MLT, delivered a decent second-quarter fiscal 2023 (ending March) operating performance with gross revenue and net property income growing strongly by 11.4% and 10.8% year-on-year, respectively, due to higher revenue contribution from its existing properties and accretive acquisitions. This was slightly moderated by the strengthening of the Singapore dollar against foreign currencies such as the Japanese yen and the South Korean won, and higher borrowing costs as a result of rising interest rates and incremental borrowings drawn down to fund its acquisitions.

Mapletree Logistics Trust, or MLT, is a real estate investment trust focusing on income-producing logistics properties in the Asia-Pacific. Most of the trust’s properties are strategically located with good access to key transport networks. The trust’s property portfolio is of good quality, in our view, and well positioned to fill the gap of the limited supply of modern logistics spaces in Asia-Pacific. At the same time, the markets that MLT operate in benefit from strong secular tailwinds of e-commerce adoption and growing middle class consumption driving leasing demand for its warehouses. Since IPO, the manager has grown the trust’s assets under management and distribution per unit by using a mixture of leasing, asset enhancement initiatives, or AEIs, and capital recycling.

Mapletree Logistics Trust, or MLT’s, first-quarter fiscal 2023 (ending March) operating performance was generally in line with our expectations. However, we are now seeing headwinds from U.S. federal-funds rate hikes and the strengthening Singapore dollar that would erode its distributions per unit, or DPU, in the near term. Hence, we have lowered our fair value estimate to SGD 1.66 from SGD 2.00 after: 1) factoring in the impact of a stronger Singapore dollar against foreign currencies; and 2) reversing our expectations of a 35-basis-point yield compression for its logistics assets that we previously baked in to reflect the tight acquisition yield environment. Our fiscal 2023 DPU estimate is lowered slightly to SGD 0.0908 from SGD 0.0910 and imputes a forward distribution yield of 5.5% based on our fair value estimate. We also expect minimal DPU growth of 0.5% for fiscal 2024 after its foreign currency hedges wear off over the next 12 months. While we continue to believe in the stewardship of MLT’s capable management team to steer the trust through the challenging macroeconomic conditions, we think the units are fairly valued at the current price and encourage investors to wait for a better entry point.

Mapletree Logistics Trust, or MLT, is a real estate investment trust focusing on income-producing logistics properties in the Asia-Pacific. Most of the trust’s properties are strategically located with good access to key transport networks. The trust’s property portfolio is of good quality, in our view, and well positioned to fill the gap of the limited supply of modern logistics spaces in Asia-Pacific. At the same time, the markets that MLT operate in benefit from strong secular tailwinds of e-commerce adoption and growing middle class consumption driving leasing demand for its warehouses. Since IPO, the manager has grown the trust’s assets under management and distribution per unit by using a mixture of leasing, asset enhancement initiatives, or AEIs, and capital recycling.

Mapletree Logistics Trust, or MLT, is a real estate investment trust focusing on income-producing logistics properties in the Asia Pacific. Most of the trust’s properties are strategically located with good access to key transport networks. The trust’s property portfolio is of good quality, in our view, and well positioned to fill the gap of the limited supply of modern logistics spaces in Asia Pacific. At the same time, the markets that MLT operate in benefit from strong secular tailwinds of e-commerce adoption and growing middle class consumption driving leasing demand for its warehouses. Since IPO, the manager has grown the trust’s assets under management and distribution per unit by using a mixture of leasing, asset enhancement initiatives, or AEIs, and capital recycling.

Mapletree Logistics Trust's, or MLT’s, fiscal 2022 (ending March) results were in line with our expectations. Net property income for the fourth quarter of fiscal 2022 increased by 14.9% year on year to SGD 157.1 million on the back of a 16.5% year-on-year increase on revenue to SGD 182.9 million. The increase is mainly attributable to: 1) higher revenue from existing properties; 2) acquisitions completed throughout fiscal year 2022; and 3) lower rental rebates to tenants affected by COVID-19. However, distribution per unit, or DPU, increased at a slower 5% year on year due to a larger unit base from its equity fund raising exercise in December 2021 and issuance of units as partial consideration for the acquisitions of 12 properties in China in January 2022.

Mapletree Logistics Trust, or MLT, announced the acquisition of Baeksa Logistics Centre in South Korea for SGD 100 million to expand MLT’s presence in the Yongin-Icheon logistics hub, a key logistics market serving the Seoul metropolitan area. The acquisition is small compared with MLT’s SGD 11.5 billion portfolio and will marginally increase MLT’s exposure to the South Korean market by 70 basis points to 9.9% of its assets under management. Consequently, our distribution per unit, or DPU, estimates are increased by only 0.3% for fiscal 2023 after factoring in a 100% debt funding and initial net property income, or NPI, yield of 4.0%.

We are transferring coverage of Mapletree Logistics Trust, or MLT, with no-moat and stable moat trend ratings. We have lowered our fair value estimate to SGD 1.90 per unit from SGD 2.10 after factoring in a higher near-term cost of debt from expected interest rates hikes through 2023, and lower acquisition pipeline per management’s guidance. Our fair value estimate implies a forward distribution yield of 4.4% in 2022. In our view, MLT is slightly undervalued currently and we like it for its strong sponsor pipeline and portfolio of logistics assets that are riding on the strong secular tailwinds of rising e-commerce adoption driving warehousing demand.