Mapletree Logistics Trust Delivers Resilient 2Q & 1H FY25/26 Results Amid Headwinds

Highlights, Strategic Moves, and Investor Implications

Mapletree Logistics Trust (MLT), Asia Pacific’s first listed logistics REIT, has released its financial results for the second quarter and first half of FY25/26, offering a comprehensive view of its operational and strategic performance. With a portfolio spanning 175 properties across nine Asia Pacific markets and assets under management (AUM) of S\$13.0 billion, MLT’s latest results reflect its resilience, prudent capital management, and ongoing portfolio rejuvenation strategy.

Key Financial and Operational Highlights

• Gross Revenue: 2Q FY25/26: S\$177.5 million, down 3.2% year-on-year. 1H FY25/26: S\$354.9 million, down 2.8% year-on-year.
• Net Property Income (NPI): 2Q FY25/26: S\$153.3 million, down 3.3% y-o-y. 1H FY25/26: S\$306.7 million, down 2.7% y-o-y.
• Distribution Per Unit (DPU): 2Q FY25/26: 1.815 cents (down 10.5% y-o-y). 1H FY25/26: 3.627 cents (down 11.4% y-o-y). DPU from operations (excluding divestment gains) was down 4.8% y-o-y in 2Q and 6.1% y-o-y in 1H.
• Portfolio Occupancy: Improved to 96.1% (up 40bps q-o-q), reflecting stable leasing activity.
• Aggregate Leverage: 41.1%, slightly lower than the previous quarter (41.2%).
• Debt Profile: 84% of debt is hedged or fixed-rate. Weighted average borrowing cost dipped to 2.6% per annum.
• WALE (by NLA): 2.7 years.
• Healthy Interest Coverage: 2.9x, with a well-staggered debt maturity profile and S\$819 million in committed credit facilities to refinance the next 12 months’ debt.

Key Strategic Initiatives and Portfolio Actions

1. Portfolio Rejuvenation Strategy

• MLT continues to execute a focused portfolio rejuvenation through active asset management, strategic divestments, and asset enhancement initiatives (AEIs).
• Approximately S\$1 billion of older specifications properties (about half in China and Hong Kong SAR) have been identified for divestment. In FY24/25, S\$209 million divestments were executed; S\$168 million completed in FY24/25, S\$41 million in FY25/26. YTD, S\$58 million divested in FY25/26, with the target for the year at S\$100m–S\$150m.
• Proceeds are being recycled into modern logistics assets with higher growth potential.
• YTD, 6 properties were divested at an average premium to valuation of ~20%, unlocking value for unitholders.

2. Strategic Asset Enhancements

• Singapore: Redeveloped 5A Joo Koon Circle into a six-storey Grade A ramp-up logistics facility, attaining BCA Green Mark Super Low Energy certification; currently 90% leased.
• Malaysia: Pursuing approval for land amalgamation in Subang, aiming to create the first mega, modern ramp-up logistics facility in Subang Jaya, with a potential fivefold increase in plot ratio.

3. Accretive Acquisitions

• MLT maintains a visible pipeline of assets from its sponsor, particularly in India, Vietnam, Malaysia, and Australia.
• Strategic focus is to anchor 65–70% of the portfolio in developed markets and 30–35% in faster-growing emerging markets.

Tenant and Market Diversification

• Developed markets constitute ~70% of AUM and revenue, with Singapore, Hong Kong SAR, China, and Japan being the largest contributors.
• Tenancy base is well-diversified across 970 customers, with the top 10 tenants accounting for merely 20.1% of total gross revenue. Approximately 85% of revenue is derived from domestic consumption, the remainder from exports.

Rental and Leasing

• Portfolio rental reversion was +0.6% in 2Q (+2.5% excluding China). China’s negative reversions continued to moderate (-3.0% in 2Q vs -12.2% a year ago).
• Occupancy remains high across all markets, with full occupancy in Australia, Malaysia, and Vietnam.

Green Agenda and Sustainability

• MLT met its FY25/26 target with self-funded solar generating capacity up 19% y-o-y to 56.4 MWp; total solar capacity reached 108.1 MWp. The 2030 target is 100 MWp self-funded.
• Green-certified space increased to 69% of portfolio GFA, on track for the 2030 target of over 80%.
• Green and sustainable financing now stands at S\$1.5 billion, or 27% of total borrowings. S\$300 million of new green finance was secured YTD.
• Green leases now account for 59% of portfolio by NLA, up from 1% in FY22/23.
• MLT is committed to carbon neutrality for Scope 1 and 2 emissions by 2030.

Risks and Headwinds

• Weaker regional currencies (notably HKD, CNY, AUD, KRW, VND) versus SGD have negatively impacted revenue and NPI, although effects have been partially mitigated via hedging.
• Absence of divestment gains contributed to a sharper y-o-y decline in DPU.
• Interest rate risks are managed with 84% of debt on fixed rates. Every 25bps increase in base rates would decrease distributable income by approximately S\$0.5 million per quarter (~0.01 cent in DPU).
• Aggregate leverage remains elevated at 41.1%, but is within regulatory limits and supported by a strong liquidity position and BBB+ credit rating.

Outlook and Potential Share Price Drivers

• The global economic outlook is mixed, with resilience noted by the IMF, but ongoing US-China tensions create uncertainty.
• MLT’s portfolio occupancy remains robust at 96.1% and operational performance is resilient. China’s logistics market is stabilising, with negative rent reversions continuing to moderate—this could be a positive inflection for future results if the trend continues.
• Strategic divestments at premiums and reinvestment into modern assets could drive future NAV and DPU growth, supporting share price upside if execution remains disciplined.
• MLT’s ongoing green and sustainability achievements, coupled with its prudent capital and risk management, position the REIT favourably in the eyes of ESG-focused investors.
• Despite lower y-o-y DPU, the quarter-on-quarter stabilisation (+0.2% q-o-q) signals resilience and could be seen as a positive inflection point should the trend continue into upcoming quarters.

What Investors and Shareholders Must Watch

• Further divestments at a premium, and redeployment of capital into accretive acquisitions, will be critical for DPU growth and could influence market sentiment and share price.
• Currency trends and interest rate movements remain key variables. Any significant reversal in SGD strength or further declines in interest rates could positively impact distributable income.
• China’s rental reversion: Continued moderation or return to positive rental growth in China could be a catalyst for a re-rating of MLT’s shares.
• Progress on asset enhancement initiatives and further increases in green-certified space and solar capacity will be watched closely by ESG-conscious investors.
• MLT’s ability to maintain high occupancy, manage costs, and execute strategic transactions will determine the sustainability of future distributions.

Conclusion

While Mapletree Logistics Trust faces ongoing currency and macroeconomic headwinds, it has demonstrated resilient operational performance, strong portfolio management, and robust capital discipline. Its strategic divestments, reinvestments, and leadership in sustainability initiatives set a strong foundation for future growth, and could be catalysts for share price appreciation should trends in rental reversions, occupancy, and acquisition pipeline remain favourable.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should read the full financial report and consult professional advisers before making investment decisions. The value of units in Mapletree Logistics Trust and the income derived from them may fall as well as rise. Past performance is not indicative of future results. The article may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed herein.

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