It’s the earning season again!
Over the past two weeks, a slew of companies reported their quarterly results. In this post, I will look at the Reits that have reported their quarterly update. As per usual, I will just highlight what caught my attention.
Based on the latest update, I am going to continue to hold on to what I have.
Mapletree Logistics Trust
The eye-pooping number must be the 32.5% increase in borrowing cost. Despite that and the impact of forex exchange where Singapore dollar strengthened during the period, the REIT was still able to eke out 1.9% increase in DPU. It is interesting that FX has a an impact than the increase in borrowing cost. Percentage gain in DPU would be more than percentage gain in revenue and income on a like-for-like basis.
Looking at the footnote, one can also see that there is also income support and divestment gain. However, this isn’t new as MLT has all along been recycling their assets and distribute part of the divestment gain. Thus far it seems that the managers will try to spread the increase over the quarters such that DPU will even out over the quarters. Which makes me wonder if they would give less income support and divestment gain if Singapore dollar did not strengthen.
In any case, the rate of increase of borrowing cost will slow going forward. If MLT can continue to increase in revenue and income, then she should be able to maintain or slowly increase the DPU.
Mapletree Industrial Trust
Similar to MLT, both revenue and income have increased at mid single digit and borrowing cost ballooned by 35%. Cross checking against the two sets of numbers, it is interesting that both REITs have similar level of revenue. However, property operating expenses is much higher for MINT. This might be due to the operation of data centres which are energy guzzlers. Couple that with higher trust expenses for MINT, the amount available for distribution dips slightly. A larger shareholders base due to DRP over the past quarters resulted in a further drop in its DPU.
The last DRP for the moment and there will be new contribution from the newly developed Kallang Way. With things more stabilised now, MINT should be able to maintain or increase their DPU slightly in the next few years.
Frasers Centrepoint Trust
Positive update as shopper traffic and tenants’ sales continue to increase. Portfolio occupancy also increases to 98.4% and looks set to improve further with on-going negotiation for Century Square anchor space. Looks like we can expect an increase in DPU comes 20231H.
FCT also announced the acquisition of 50% of NEX with Frasers Property, in which FCT will hold 25.5%. NEX is a quality asset and I am glad that FCT got its foot into it. In the short term, the impact will be minimal but I believe that the management can enhance the asset to bring greater distribution in the future. It is also likely that FCT will take over Fraser Property stake in years to come.
Parkwaylife Reit has done it again! There was concern of depreciation of JPY but hedging has helped to mitigate it. The rental reversion from Singapore hospitals also meant it collected higher rental from it for the year, resulting in positive metric all round.
Major refurbishment of Mount Elizabeth Hospitals has commenced in 2023 and is expected to complete in 2025. With the favorable lease structure and strong management, I am expecting continued stable distribution in the next few years before the jump in FY2026.