Mapletree Logistics Trust Q2 DPU flat at S$0.01816

[SINGAPORE] Mapletree Logistics Trust (MLT) had a flat second quarter, with distribution per unit (DPU) of S$0.01816 barely up, by 0.1 per cent, from S$0.01815 in the year-ago period.

Distributable income grew 0.9 per cent to S$93.3 million for the quarter ended Sep 30, 2026, from S$92.5 million previously.

Revenue rose 1.4 per cent to S$180 million, from S$177.5 million a year earlier. Net property income (NPI) rose 1 per cent to S$154.8 million from S$153.3 million.

The increase was largely driven by contributions from the Mapletree Joo Koon Logistics Hub redevelopment, an acquisition in India, organic growth in Singapore, and currency appreciation of the renminbi and Australian dollar, said the manager.

These gains were partly offset by the absence of contributions from divested properties.

For the six months ended Sep 30, MLT’s DPU was similarly flat – 0.1 per cent higher to S$0.03632, from S$0.03627 a year earlier. Distributable income for H1 rose 1 per cent year on year to S$186.3 million.

Revenue increased 1.1 per cent year on year to S$358.9 million, while NPI grew 1.5 per cent to S$311.2 million.

MLT’s assets under management stood at S$13.1 billion as at Sep 30.

Its portfolio occupancy stood at 96.4 per cent as at Sep 30, supported by “resilient leasing demand”.

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Across its portfolio, average rental reversion remained positive at 2.1 per cent, up from 0.9 per cent in the preceding quarter. Excluding China, rental reversion was 4.2 per cent, compared with 2.3 per cent previously.

Rental reversion in China, which accounted for 14.4 per cent of MLT revenue in the first half, was minus 1.7 per cent, compared with minus 1.8 per cent in the previous quarter. Occupancy in the country, however, improved to 94.4 per cent, from 93.8 per cent.

During an earnings call on Wednesday (Oct 28), management said rental reversions in China are expected to remain around current levels over the next few quarters, although some regions are showing signs of stabilisation.

Rents in West China have shown signs of bottoming out, while rental declines in East China have moderated amid improving demand. However, South China continues to face excess supply, with rents expected to decline further.

Jean Kam, chief executive officer of MLT’s manager, said it was too early to determine when rental reversions in China would turn neutral, given the relatively short lease duration of around one year in the market.

The manager also said it intends to “selectively increase rents for higher occupied properties” in China. “In the past, there was sacrifice of rent for the sake of occupancy because we want the tenants to stay with us.”

Rental reversions in Singapore, which accounted for 31.4 per cent of revenue in H1, are expected to remain healthy at between 3 and 5 per cent, driven by strong manufacturing activity. Management also expects positive rental reversions of between 3 and 5 per cent across its emerging markets of Malaysia, Vietnam and India.

The weighted average lease expiry of MLT’s portfolio stood at 2.5 years as at end-September.

The trust also announced plans to redevelop two adjacent properties in Singapore at 9 and 15 Changi South Street 2 into a five-storey, Grade A ramp-up warehouse, at an estimated development cost of S$141 million.

The redevelopment will increase the properties’ combined gross floor area by 34 per cent to almost 500,000 square feet.

Located within the Changi (South) International LogisPark, the facility will feature direct ramp access to every floor, larger floor plates, and wider ramps and driveways that can accommodate 45-foot container trucks.

Redevelopment works are expected to commence in Q1 2027 and be completed in Q2 2029.

Kam said MLT is expecting return on investment of 6 to 6.5 per cent for the Changi South revamp. She added that the redevelopment is not expected to have a significant impact on MLT’s NPI, as the two properties are not fully occupied.

Asked about the timeline of MLT unlocking value from its property at 201 Keppel Road that is occupied by Prima, Kam said the opportunity would likely be more “medium term”.

The property, which MLT acquired from its sponsor Mapletree Investments in 2005 at an appraised value of S$26.5 million, is subject to a call option that gives the sponsor the right to buy back the site for redevelopment.

Prima’s lease expires in 2028, and Mapletree is exploring various options for the future of the property as part of the broader rejuvenation of the Greater Southern Waterfront. This includes conservation studies to assess opportunities for adaptive reuse.

MLT has executed approximately S$243 million in divestments in FY2027 to date, at an average premium of 3.1 per cent to valuation. These include assets in China, Singapore and Australia, and strata-titled units in Hong Kong.

The trust has identified further assets for sale in Singapore, Australia and Japan, alongside one or two remaining properties in China and strata-titled units in Hong Kong.

Kam said total divestments could exceed the earlier target of S$200 million to S$300 million if the remaining transactions are successful, although some would likely extend into the next financial year.

On acquisitions, Kam said Singapore will remain its core market, offering relatively attractive yield spreads, while Vietnam, Malaysia and India stand to benefit from the China+1 strategy as companies diversify their supply chains.

She added that MLT would maintain its capital allocation strategy, with around 70 per cent of its portfolio in developed markets and 30 per cent in emerging markets.

MLT’s aggregate leverage fell to 37.5 per cent as at Sep 30, from 40.5 per cent in the preceding quarter, after proceeds from the August 2026 S$400 million perpetual securities were used to repay debt ahead of their November redemption. Pro forma gearing would have otherwise been 40.4 per cent.

Weighted average borrowing cost for Q2 rose slightly to 2.7 per cent. For FY2027, average borrowing cost is expected to be 2.7 to 2.8 per cent.

Looking ahead, the manager cautioned that “geopolitical tensions, elevated energy prices and persistent inflationary pressures” could weigh on the global economic outlook.

“Interest rates could remain higher for longer, while currency volatility and higher borrowing costs are expected to remain headwinds to MLT’s financial performance. A broader macroeconomic slowdown could also moderate demand for logistics space,” it added.

Units of MLT ended Wednesday 0.9 per cent or S$0.01 lower at S$1.07, before the announcements. The Q2 distribution will be paid out on Dec 17, after the record date of Nov 5.