MapleTree – BT

MapletreeLog slashes leverage ratio to 36.9%

MAPLETREE Logistics Trust (MapletreeLog) cut its leverage ratio to 36.9 per cent in the third quarter of this year – down significantly from 56.3 per cent in Q2.

At Sept 30, its debt was down about 30 per cent – from $1.461 billion in the previous quarter – to $1.023 billion, with the help of a rights issue in July.

However, this had a dilution effect on its distribution per unit (DPU).

For Q3, MapletreeLog reported DPU of 1.84 cents, down 9.8 per cent quarter on quarter but up 7 per cent year on year.

Distributable income of $25.4 million was 33.1 per cent higher than a year earlier, while net property income was up 18.7 per cent to $40.2 million.

At the close of the rights issue offer period, only 59.9 per cent of valid acceptances were received. MapletreeLog’s sponsor Mapletree Investments took up the balance of the units and applied for excess rights, lifting the final demand tally to 130.7 per cent.

The rights issue, which was completed on Aug 22, saw 831.1 million new units issued, increasing the number of outstanding units from 1.108 billion to 1.939 billion. MapletreeLog raised $606.7 million from the issue – and used a significant portion to repay loans.

Of its current debt of $1.023 billion, $114 million is due to mature within 12 months. ‘We are comfortable with this,’ said Chua Tiow Chye, the chief executive of Reit manager Mapletree Logistics Trust Management.

Mr Chua also said the trust has committed bank lines and firm proposals that are twice the amount, as well as other uncommitted lines.

‘We are well positioned to weather the current challenging environment as there is no funding or refinancing risk,’ he said.

Weathering the ‘challenging environment’ means MapletreeLog will get off the acquisition trail for a while, especially as it would like to maintain a leverage ratio of 40-45 per cent.

It has announced two acquisitions with a book value of $46 million that are pending completion.

Mr Chua said that looking forward, growth will be at a more moderate pace of 3 per cent. ‘If we do acquisitions, it will be based on debt and equity,’ he said.

MapletreeLog’s less aggressive stance will also extend to its tenants. ‘With the downturn, we need to be more circumspect on how much we can push tenants on rental reversion,’ Mr Chua said, adding that the trust will look instead at ‘rental retention’.

Expenses increased 26.4 per cent year on year to $5.8 million in Q3, due to higher property taxes and land rents.

Still, rental reversion was about 30 per cent higher. The trust’s portfolio of 79 buildings, valued at $2.485 billion, also had an occupancy rate of 99 per cent.