Mapletree Logistics Trust (MLT) reported 2QFY13 DPU of 1.71 S cents, up 1.2% YoY. This brings the 1HFY13 DPU to 3.41 S cents, forming 48.3%/48.7% of our/consensus full-year DPU projections. Operationally, we note that MLT’s portfolio occupancy improved 0.2ppt QoQ to 99.2%, driven by stronger take-up rates in China, Hong Kong and Singapore. Leases renewed/replaced also achieved positive rental reversions of 8% on average. Looking ahead, management expects the overall acquisition activity to moderate, citing competitive cap rates in Singapore and relatively muted growth in Japan. Hence, it intends to turn more aggressive on capital recycling and asset enhancement initiatives (AEIs)/ asset redevelopment. We are currently keeping our forecasts unchanged. However, our fair value is raised to S$1.24 from S$1.19 as we lower MLT’s cost of equity to 8.5% from 9.3% to align with the current low interest rate environment. Maintain BUY.
No surprises in 2QFY13 performance
Mapletree Logistics Trust (MLT) reported NPI of S$67.5m and distributable amount of S$41.4m for 2QFY13, representing a YoY growth of 14.6% and 1.2% respectively. Contributions from its past acquisitions and improved operating metrics were the key drivers for the performance. DPU similarly grew 1.2% YoY to 1.71 S cents (3.0% growth after stripping off gains from divestment in 2QFY12). This brings the 1HFY13 DPU to 3.41 S cents, forming 48.3%/48.7% of our/consensus full-year DPU projections.
Sustained stability in portfolio
Operationally, we note that MLT’s portfolio occupancy improved 0.2ppt QoQ to 99.2%, driven by stronger take-up rates in China, Hong Kong and Singapore. Leases renewed/replaced achieved positive rental reversions of 8% on average, lower than 10% seen in 1Q. However, this was mainly dragged down by the restructuring of the hybrid lease at 60 Alps Avenue in Singapore to triple-net lease. Excluding that, 16% positive reversions would have been clocked. For the rest of FY13, we understand that only 4.2% of its leases by NLA are due for renewal. Hence, we believe its portfolio income will remain stable.
Focus on AEI and capital recycling
Looking ahead, management expects the overall acquisition activity to moderate. While MLT is actively looking at investments in Korea and China and new markets like Indonesia and Australia, the REIT shared that cap rates in Singapore have been very competitive and growth in Japan may be relatively muted. Hence, it intends to turn more aggressive on capital recycling and asset enhancement (AEI)/ asset redevelopment. In fact, MLT is currently in advanced negotiations with a major third-party logistics service provider for a build-to-suit development at Iwatsuki Centre, Japan. If concluded, the yield is expected to be enhanced at this property. We are currently keeping our forecasts unchanged. However, our fair value is raised to S$1.24 from S$1.19 as we lower MLT’s cost of equity to 8.5% from 9.3% to align with the current low interest rate environment. Maintain BUY.
Mapletree Logistics Trust (MLT) reported NPI of S$67.5m and distributable amount of S$41.4m for 2QFY13, representing a YoY growth of 14.6% and 1.2% respectively. Contributions from its past acquisitions and improved operating metrics were the key drivers for the performance. DPU similarly grew 1.2% YoY to 1.71 S cents (3.0% growth after stripping off gains from divestment in 2QFY12). This brings the 1HFY13 DPU to 3.41 S cents, forming 48.3%/48.7% of our/consensus full-year DPU projections.
Sustained stability in portfolio
Operationally, we note that MLT’s portfolio occupancy improved 0.2ppt QoQ to 99.2%, driven by stronger take-up rates in China, Hong Kong and Singapore. Leases renewed/replaced achieved positive rental reversions of 8% on average, lower than 10% seen in 1Q. However, this was mainly dragged down by the restructuring of the hybrid lease at 60 Alps Avenue in Singapore to triple-net lease. Excluding that, 16% positive reversions would have been clocked. For the rest of FY13, we understand that only 4.2% of its leases by NLA are due for renewal. Hence, we believe its portfolio income will remain stable.
Focus on AEI and capital recycling
Looking ahead, management expects the overall acquisition activity to moderate. While MLT is actively looking at investments in Korea and China and new markets like Indonesia and Australia, the REIT shared that cap rates in Singapore have been very competitive and growth in Japan may be relatively muted. Hence, it intends to turn more aggressive on capital recycling and asset enhancement (AEI)/ asset redevelopment. In fact, MLT is currently in advanced negotiations with a major third-party logistics service provider for a build-to-suit development at Iwatsuki Centre, Japan. If concluded, the yield is expected to be enhanced at this property. We are currently keeping our forecasts unchanged. However, our fair value is raised to S$1.24 from S$1.19 as we lower MLT’s cost of equity to 8.5% from 9.3% to align with the current low interest rate environment. Maintain BUY.
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