CGS International: Mapletree Logistics Trust – Reversion Resilience from Portfolio Diversity (April 24, 2025)

CGS International report dated April 24, 2025, analyzes Mapletree Logistics Trust (MLT), highlighting its reversion resilience stemming from portfolio diversity.

Mapletree Logistics Trust: Navigating Reversion with a Diverse Portfolio

Mapletree Logistics Trust (MLT) demonstrates resilience through its well-diversified portfolio, according to a recent CGS International report. The analysis focuses on MLT’s FY3/25 performance, portfolio occupancy, rental reversions, and overall financial health. The report maintains an Add rating with a revised target price.

FY3/25 DPU In Line with Forecasts

• MLT’s 4QFY25 and FY3/25 distribution per unit (DPU) of 1.955 and 8.053 Singapore cents (Scts) respectively, aligned with expectations, reaching 24.4% and 100.6% of CGS International’s FY25F forecast [[1]].

Strong Portfolio Take-Up Rate

• The trust achieved a portfolio take-up rate of 96.2% in 4QFY25, accompanied by a positive rental reversion of +5.1% [[1]].

Reiterated Add Rating with a Lower Target Price

• CGS International reiterates its Add rating for MLT but lowers the DDM-based target price to S\$1.63 [[1]].

4QFY3/25 Results: Key Highlights

MLT’s 4QFY25 results reveal a slight dip in revenue and net property income (NPI), offset by positive contributions from specific geographical areas [[1]].

• Revenue: Experienced a 0.8% year-over-year (yoy) decrease in 4QFY25, totaling S\$179.6 million [[1]].
• NPI: Slipped by 1.6% yoy to S\$152.8 million, attributed to reduced contributions from China, the absence of income from divested properties, and unfavorable foreign exchange rates. These factors were partially mitigated by increased contributions from Singapore, Australia, and Hong Kong, China [[1]].
• Distribution Income: Reached S\$99.1 million, translating to a DPU of 1.955 Scts, which is a 10.3% yoy decrease due to higher borrowing costs and reduced distribution of divestment gains [[1]].
• Valuation: Faced net fair value losses in properties located in China, South Korea, and Singapore, balanced by gains from other markets [[1]].

Portfolio Performance and Occupancy

MLT’s portfolio maintained a high occupancy rate, although there were slight variations across different regions [[1]].

• Occupancy: Experienced a minor decrease of 0.1 percentage point (ppt) quarter-over-quarter (qoq) in 4QFY25, settling at 96.2%. This decline was influenced by lower take-up rates in Singapore, Japan, South Korea, Vietnam, and Malaysia [[1]].
• Redevelopment: The redevelopment project at 5A Joo Koon Circle has secured a pre-commitment rate of 46% (compared to 11% in 3QFY25), with an additional 30% under active negotiation. The project is on track for completion in May 2025 [[1]].
• Rental Reversion: Achieved an overall rental reversion of +5.1% (+6.9% excluding China) in 4QFY25. Positive reversions ranged from 1.3% in Hong Kong SAR to 15.7% in Japan. China experienced negative rental reversion in 4QFY25 (-9.4% over the previous level), although the downward trend showed signs of slowing [[1]].
• Lease Expiries: MLT faces 32.3% and 21.9% of leases coming up for re-contracting in FY26F and FY27F, respectively. With 50% of FY26F lease expiries originating from China, negative reversions in that region could potentially impact the overall portfolio rental reversion [[1]].

Gearing and Interest Costs

MLT’s gearing ratio saw a slight increase, while interest costs remained stable [[1]].

• Gearing: Reached 40.7% by the end of 4QFY25 [[1]].
• Interest Cost: Remained stable qoq at 2.7% [[1]].
• Hedging: Approximately 81% of MLT’s debt is hedged into fixed rates, and 75% of distributable income is hedged into Singapore dollars (S\$) for the next 12 months [[1]].
• Capital Management: MLT intends to retain divestment gains to enhance financial flexibility, given the current uncertain market conditions [[1]].
• Tenant Base: About 85% of MLT’s tenants serve domestic consumption, with only 15% engaged in export business, which provides portfolio resilience [[1]].

Revised DPU Estimates and Outlook

CGS International has adjusted its DPU estimates for FY26-27F, reflecting a slower growth outlook [[1]].

• DPU Adjustments: FY26-27F DPU estimates have been reduced by 1.09-1.98% due to a more conservative growth outlook [[1]].
• Target Price Revision: Consequently, the DDM-based target price has been lowered to S\$1.63, with an unchanged cost of equity of 7.83% [[1]].
• Re-rating Catalysts: Sustained leasing momentum amid positive rental renewals and accelerated asset recycling activities are potential catalysts for a re-rating [[1]].
• Downside Risks: Risks include a soft macroeconomic outlook impacting rental growth and portfolio values, as well as the rental reversion outlook [[1]].

SREIT Peer Comparison

Here’s a comparison of key metrics among SREIT peers, including dividend yields, target prices, and market capitalization [[2]]:

ESG Analysis

MLT demonstrates a commitment to ESG principles, with a focus on environmental sustainability and ethical standards [[3]].

• LSEG ESG Score: MLT received a B grade for its overall ESG performance in FY3/23, with Environmental (B+), Social (B), and Governance (B+) scores. The trust scored an A+ for ESG Controversies [[3]].
• Green Roadmap: MLT launched a green roadmap in its FY3/24 annual report, outlining 2030 targets for green building certification and solar energy generation. The trust aims to achieve carbon neutrality for Scope 1 and 2 emissions by 2030 and net-zero emissions by 2050 [[3]].
• Targets: MLT aims to achieve green certification for over 80% of its portfolio and reduce energy intensity in Singapore and Hong Kong SAR by 20% from the FY3/19 baseline by 2030. Additionally, the trust plans to expand solar energy generating capacity to 100 MWp by 2030 [[3]].
• ESG Initiatives: Notable ESG initiatives include increasing green certified space to 45% of the portfolio by GFA as of September 2024, increasing self-funded solar generating capacity to 47.6MWp, and adding over 1,600 indigenous trees across its portfolio in FY3/24 [[3]].
• Green Financing: As of end-December 2024, MLT’s total green loans and sustainability-linked loans stood at S\$1.2 billion, accounting for approximately 21.6% of its total debt facilities [[3]].

Financial Summary

Key financial data and projections for Mapletree Logistics Trust [[4], [5]]:

Note: This article is based on information from a CGS International report dated April 24, 2025, and is intended for informational purposes only.