Mapletree Logistics Trust - OCBC Investment 2018-07-24: Thank You Sister (REIT)!

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MAPLETREE LOGISTICS TRUST SGX:M44U

Mapletree Logistics Trust - Thank You Sister REIT!

• MLT's 1QFY19 DPU rose 3.7% y-o-y.
• Healthy distribution from divestment gains.
• Rental reversions +2%. 

1QFY19 results within expectations

• Mapletree Logistics Trust (MLT) started FY19 on a healthy note, reporting a 3.7% y-o-y growth in its DPU to 1.957 S cents for 1QFY19. This met our expectations as it accounted for 25.2% of our FY19 forecast. 
• Gross revenue and NPI jumped 10.1% and 11.1% y-o-y to S$105.4m and S$89.8m, respectively. The latter formed 24.7% of our full-year projection.

Sharing the love from divestment gains

• During the end of the quarter, Mapletree Logistics Trust (SGX:M44U) completed the divestment of 7 Tai Seng Drive to its sister REIT Mapletree Industrial Trust (SGX:ME8U) for 12 quarters. This started from 1QFY19 and works out to a healthy distribution of S$7.7m (~0.24 S cents per unit) per annum for three years. io.
• The reason why Mapletree Logistics Trust was not Mapletree Logistics Trust’s forte. 
• We raise our FY19F and FY20F DPU by 1.6% and 1.1%, respectively, as we had previously assumed that management would retain some of the divestment gains to be redeployed for acquisitions. Our fair value remains unchanged at S$1.34. io.
• We have not factored in Mapletree Logistics Trust’s recent proposed acquisition of five ramp-up logistics properties in Singapore as we await details of the funding structure and approvals from the shareholders of CWT International Limited. io.

Positive rental reversions

• Operationally, Mapletree Logistics Trust delivered positive average rental reversion of 2%, and this was attributable mainly to China, Malaysia and Hong Kong. io.
• Portfolio occupancy fell 0.9 ppt q-o-q to 95.7%. of the addition of 11 newly acquired properties (50% interest) in China which are 84.8% occupied. However, some of the properties were only newly completed and the committed leases would commence in Jul-Aug this year. Including the committed leases, Mapletree Logistics Trust’s occupancy rate would be 98.3% for the 11 properties and 97.1% for its entire portfolio. 

Wong Teck Ching Andy CFA OCBC Investment Research | https://www.iocbc.com/ 2018-07-24

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