Mapletree Logistics Trust (MLT) is the first Asia-focused logistics REIT in Singapore.
MLT was listed on the Main Board of the SGX-ST on 28 July 2005 with an initial portfolio of 15 Singapore-based properties valued at S$422 million. The trust invests in a diversified portfolio of quality income-producing logistics real estate as well as real estate-related assets in the fast-growing Asia-Pacific logistics sector.
As at 31 March 2022, MLT grew its portfolio to 183 properties with Assets Under Management (AUM) of S$13.1 billion. The portfolio spans 9 geographical markets, namely Singapore, Hong Kong SAR, India, Japan, China, Australia, South Korea, Malaysia and Vietnam. The trust offers investors an opportunity to benefit from the growing Asia-Pacific logistics sector whilst enjoying stable distributions.
MLT is managed by Mapletree Logistics Trust Management Ltd, a wholly owned subsidiary of Mapletree.
Overview of Business – Mapletree Logistics Trust REIT
Key highlights of MLT REIT Portfolio:
- 183 Properties, 9 Geographical Markets, and 62 Cities
- Assets Under Management: S$13.10 billion
- Portfolio Occupancy: 96.70%
- Gross Floor Area: 7.9 Million SQM
- Weighted Average Lease Expiry (WALE): 3.5 years
Gross Revenue & Assets Under Management
Gross Revenue by Geography – S$678.6 Million
The 3 main countries which attributed to the Gross Revenue are
- Hong Kong SAR
Assets Under Management by Geography – S$13.1 Billion
The 3 main countries which attributed to the Assets Under Management (AUM) are
- Hong Kong SAR
Gross Revenue & Net Property Income
Gross Revenue for FY21/22 increased 20.9% (year-over-year) to S$678.60 million from FY20/21 S$561.10 million. The Compound Annual Growth Rate (CAGR) of MLT’s Gross Revenue over 5 years amounted to 11.41%. MLT’s portfolio continued to demonstrate resilience, enabling the Trust to deliver robust growth in both revenue and NPI in FY21/22. The improved performance was driven by healthy demand for its existing assets, underpinned by favorable market dynamics, and augmented by contributions from accretive acquisitions.
Net Property Income (NPI) for FY21/22 increased 18.6% (year-over-year) to S$592.10 million from FY20/21 S$499.10 million. The robust performance was mainly due to an enlarged portfolio, higher contribution from existing assets, and lower rental rebates granted to eligible tenants impacted by COVID-19.
Distributable Income & Distribution Per Unit
Distributable Income for FY21/22 increased 17.3% (year-over-year) to S$390.70 million from FY20/21 S$333.10 million. The Compound Annual Growth Rate (CAGR) of MLT’s Distributable Income over 5 years amounted to 2.90%.
Growing in tandem with revenue and NPI, DPU increased by 5.5% to 9.787 cents on an enlarged unit base. MLT’s resilient and steady performance over the years is testament to its focus on active asset management and prudent capital management to drive sustainable returns, and the strength of its diversified portfolio.
Gearing Ratio & Property Yield
With the significant investments MLT REIT made during the year, we have strengthened our balance sheet and closed the year with a gearing ratio of 36.8%. This is well below the aggregate leverage limit of 50% set by the Monetary Authority of Singapore, providing us with ample debt headroom to take advantage of investment opportunities as they arise.
Similarly, MLT REIT property yield fell mostly owing to a S$1.8 billion in acquisitions and capital expenditure, and S$572.3 million of portfolio revaluation gain. The performance reflects MLT’s commitment to continually strengthen its regional presence through additions of modern, well-located assets, enabling the Trust to support its customers with a variety of high quality leasing solutions. As a result, the property yield in FY21/22 decreased to 4.52% from 4.62% in FY20/21.
Mapletree Logistics Trust’s Occupancy Rate
MLT REIT portfolio occupancy was maintained at a healthy level of 96.7%, while tenant retention rate was 68%. The occupancy rate in FY20/21 of 97.50% dropped to 96.70% in FY21/22 mainly due to MLT’s China portfolio registering an occupancy rate of 93.1%, compared with 95.3% a year ago. The decline was partly due to the inclusion of 12 new assets, which had an average occupancy of 91.1%.
Mapletree Logistics Trust’s Interest Coverage Ratio
MLT REIT Weighted Average Debt Duration remained stable at 3.8 years. MLT REIT has an impressive interest coverage ratio of 5.0 times, demonstrating its solid financial health and ability to satisfy interest commitments.
Mapletree Logistics Trust’s Rental Reversions
MLT’s achieved an overall weighted average positive rental reversion of 2.5% in FY21/22, with individual market rental reversions ranging from 1.2% to 5.0% across the nine operating markets. The continued growth of e-commerce is expected to increase demand for well-located, quality spaces and consequently, rent growth, increasing opportunities for positive rental reversion across MLT’s properties.
Mapletree Logistics Trust’s Growth Prospects
Supply Chain Disruption
There is a greater emphasis on supply chain resiliency. Before Trade War and Covid-19, Supply chains have been focusing on cost efficiency with companies adopting a lean inventory level.
Instead of being over-reliant on lean inventory level, many retailers have move to “Just-in-Case”, where
- Inventory of retailers is expected to increase by 10% to 15% to serve as safety stock in the event of supply chain disruptions
- Businesses and governments are now increasingly aware of the importance to balance supply chain efficiency and costs
- Supply chain resilience will be prioritized over efficiency especially for businesses operating in critical sectors
- Businesses are softening their lean-inventory strategies and carrying more inventory as “safety stock” → more logistics space
MLT’s extensive network of logistics facilities across key geographies is well-positioned to benefit from this structural trend.
Supply Chain Diversification
MLT leveraging on the “China Plus” strategy adopted by companies with bolster demand for logistics requirements in Vietnam and Malaysia. Companies are adopting the “in China for China” strategy to serve the local market while adding incremental capacity elsewhere.
Vietnam and Malaysia are projected to benefit from strong Foreign Direct Investment (FDI) growth, with knock-on positive effects on consumption and demand for logistics space.
Mapletree Logistics Trust’s Dividend Yield
Dividend Yield (5 Year)
The current Dividend Yield MLT REIT stands at 5.47%,it’s 5-year Avg Yield stands at 5.02%
Dividend Yield (1 Year)
The current Dividend Yield MLT REIT stands at 5.47%,it’s 1-year Avg Yield stands at 4.75%
Our Stand – Mapletree Logistics Trust REIT
MLT REIT has been one of the best performing REITs since its inception, MLT REIT has also built a long-term track record of delivering:
- Strong historical growth in Gross Revenue, NPI, and DPU
- Increasing Rental Reversions
- Strong tailwinds for future growth – Supply Chain Disruption & Supply Chain Diversification
MLT REIT, despite its strong fundamentals, appears as fair value to me right now, with a current dividend yield of 5.47%. I will probably be looking to start a small position on MapleTree Logistics Trust REIT and all more if the dividends become increasingly attractive.
Disclosure: No position at time of writing.
Disclaimer: The information provided by LearnToInvest serves as an educational piece and is not intended to be personalised investment advice. Readers should always do their own due diligence and consider their financial goals before investing in any stock.