Headwinds await Mapletree Logistics Trust despite impressive 2Q performance

The pace of growth will likely moderate.

Mapletree Logistics Trust reported an impressive set of results for the third quarter. Its gross revenue grew 5.8% year-on-year to $81.5m, while its distribution per unit grew 3.3% to 1.88 cents.

However, OCBC cautions that the near-term outlook will be challenging for MLT. The group recorded lower occupancy at several of its newly converted multi-tenanted buildings in Singapore, while overall portfolio occupancy rates slipped 0.4 ppt quarter-on-quarter to 97.2%, its fourth consecutive quarter of decline.

Although MLT managed to achieve positive average rental reversions of 9% for leases renewed in 2QFY15, the outlook remains muted.

“This is attributed to the sluggish macroeconomic environment, tighter regulatory landscape and higher expenses from the continued conversion of its single-tenanted assets to multi-tenanted buildings in Singapore. Nevertheless, we still expect rental reversions to remain positive, although the pace of growth would likely moderate,” noted OCBC.