Tuesday, 22 July 2014

Fraser Commercial Trust & Mapletree Logistics Trust - Latest Results!

Two of my REITs portfolio release results yesterday. 

They are Fraser Commercial Trust (FCOT) and Mapletree Logistics Trust (MLT)

In general, I am happy with both companies’ results, especially when DPUs continue to grow and both companies exhibit dividend yield of >6% which is acceptable for me. Strong occupancy and healthy WALE are pleasing to hear, backed by healthy leverage and strong debt management. I also like FCOT potential growth in earnings when Alex Technopark new rental rates kick in during FY15. MLT continual acquisition strategies also signal confidence into the future, backed by strong sponsor of Mapletree. 

See Results release summary as follows for both companies. 

  • Distributable income to Unitholders 3QFY14 grew 2.9% to S$14.8 million. 
  • DPU of 2.19 cts same yoy. 
  • Est FY14 DPU of 8.6c 
  • Est Dividend yield 6.1% (last close price S$1.44) and 6.6% (at my cost).
  • P/E ~6.6 and P/B~0.92 
China Square shines while Australia Drags
  • YoY NPI gains of 10% for China Square Central and 7% for Market Street were offset by NPI declines at Caroline Chisholm Centre (-10%) and Central Park (-2%) respectively.
  • Lower NPI mainly due to the weaker AUD and slightly higher expenses for Caroline Chisholm Centre incurred for repair and maintenance works undertaken.
  • Despite the slightly lower NPI, savings in the CPPU distribution led to the higher distributable income in 3QFY14. 
Strong Occupancy & Healthy WALE
  • The occupancy rates in S’pore and Australia were 98.4% and 97.3%, respectively. China Square Central attained 100.0% committed occupancy and continues to benefit from the AEI completed in the prior year. 
  • The portfolio WALE of about 3.9 years continues to be anchored by the long WALE of Caroline Chisholm Centre of 11.0 years.
  • Demand for space in the properties was supported by tenants from diverse sectors.
Strong re-financing
  • Net cash flows from the Australian properties have been hedged to manage the impact of the weaker Australian dollar.
  • Interest coverage ratio is at 4.4 times and an all-in interest rate of 2.8% per annum.
  • Singapore properties continue to enjoy the uptrend in rentals, achieving positive rental reversions of between 10.7% to 11.5% for leases which commenced in 3QFY14. 
  • Australia Central Park achieved an 87.0% increase in rental reversion for a lease which commenced in 3QFY14, as the new lease replaced an expired long lease which was contracted more than 10 years ago.
  • Anticipate significant positive rental reversions of Alexandra Technopark in FY15, as underlying leases were renewed at $3.6psf average passing gross rents vs the master lease net rent of S$1.8psf.
FCOT 3Q14 Results here

  • Distributable income to Unitholders 1Q FY14/15 grew 6% to S$46.6 million.
  • DPU grow 6% to 1.90 cts vs 1.80 cts yoy.
  • Est FY14 DPU of 7.6c
  • Est Dividend yield 6.5% (last close price S$1.16) / 6.9% (at my cost).
  • P/E ~10.1 and P/B~1.20.
Strong Performance from New Properties / Positive Rental Reversions
  • MLT recorded higher gross revenue of S$81.0 million (7% incr).
  • NPI for 1Q FY14/15 increased by 6% to S$69.0 million
  • Primarily due to contributions from Mapletree Benoi Logistics Hub and one South Korea property acquired in 2Q FY13/14.
  • Positive rental reversions mainly in HK and S’pore, as well as higher revenue from four Japan properties which completed the installation of solar panels last year. 
Recent Acquisitions
  • Recent acquisitions of the Iskandar Malaysia property and Korean Daehwa Logistics Centre with both expected to contribute to MLT’s DPU in future quarters. 
  • Also commenced the redevelopment of 5B Toh Guan Road East.
  • MLT’s portfolio increased to 113 properties with a book value of S$4.3 billion. Of the 113 properties, 52 are in Singapore, 22 in Japan, 14 in Malaysia, 8 in Hong Kong, 7 in China, 9 in South Korea and 1 in Vietnam. 
Strong Occupancy & Healthy WALE
  • Portfolio occupancy rate at 97.6% in 1Q FY14/15. 
  • WALE ~4.7 years with 46% of the leases having expiry dates in FY17/18 and beyond. 
Strong re-financing / Risk management
  • Aggregate leverage at 33.4% up slightly from 33.3%. 
  • Ave duration of debt ~3.4 years and weighted ave interest at 2.0%.
  • 76% of total debt hedged to fixed rate due to additional interest rate swap, tenors of up to 7 years.
  • 88% of FY14/15 income is SGD hedged into / derived SGD to mitigate Forex risk.
  • Interest coverage ratio at 8.4 times.
  • Demand for logistics properties in MLT’s markets remains stable.
  • HK, CN, MY, JP: firm demand underpinned by growing domestic consumption and improving global economy, coupled with tight supply.
  • SG: leasing activities still healthy but customers have more choices with new developments coming onstream.
  • Expects short term pressure on occupancy rate and rising property expenses, with more conversion of single-user assets to Multi-Tenanted Building conversions coming through.
  • MLT will selectively pursue strategic acquisitions and unlock value via AEI, and recycle capital released from divestment of lower yielding assets into higher yielding assets
MLT 1Q FY14/15 Results here

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  1. Hi Rolf

    I am invested in FCOT, can't wait for the Alexander Park uplift rental to kick in ;)

  2. Hi B,
    Just like you, that is also one of the reasons why I initiated FCOT in the first place.
    Thanks Rolf