Mapletree Logistics Trust (SGX: M44U) is a real estate investment trust (REIT) that owns 137 logistics properties around Asia and Australia. There are three good reasons for investors to like the REIT now.
A solid track record
One of the very first things to like about MLT is its solid historical financial performance.
Over the last five years, MLT has grown its gross revenue from S$330.1 million in FY14/15 to S$454.3 million in FY18/19. Similarly, its distributable income grew from S$184.9 million to S$270.0 million during the period. Consequently, distribution per unit (DPU) grew from 7.500 Singapore cents in FY14/15 to 7.941 Singapore cents in FY18/19.
Such numbers should be appealing to investors looking for investments with sustainable income, but can MLT sustain its historical performance going forward? Let’s see.
Strong quarterly performance
Not only does MLT have a strong track record, it has also continued to deliver positive performance lately. Let’s look at some numbers.
For the quarter ended 30 June 2019, MLT’s gross revenue grew 13.6% year on year to S$119.8 million, while net property income improved by 18.2% to S$106.1 million. Similarly, the REIT’s distribution per unit (DPU) was up by 3.5% year on year to 2.025 Singapore cents.
The improvement was primarily due to income contribution from existing properties, new acquisitions, and a redeveloped property in Shanghai, China.
In short, MLT sustained its strong performance in the latest quarter.
Last but not least, there’s a third and final reason to like MLT, which is its low gearing.
As of 30 June 2019, the REIT’s gearing stood at 36.8%, which is a safe distance from the regulatory ceiling of 45%. There are many benefits to having a low gearing. For one, the financial risk is low, but beyond that, such a low gearing means MLT has ample room to leverage its balance sheet to acquire new assets without the need to dilute shareholders.
Investors can sleep better knowing that this REIT is financially sound — and also well positioned to grow (if the right opportunity rises).
MLT is a good candidate for investors to explore further because of its solid financial track record, strong recent performance, and low gearing.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has recommended the stock of Mapletree Logistic Trust.
Motley Fool Singapore 2019