Will Mapletree Logistic Trust 3.65% Perpetual be refixed?

Shawn Sng  |   17 Feb 2023  |    339 views

Soon Mapletree Logistic Trust will have to announce if they will be calling back its 3.65% perpetual notes within 27 February – 13 March. The reset date for these perpetual bonds falls on the 28 March 2023. If the bonds are not recalled then, the bonds will be refixed to at the prevailing 5 year SOR + Initial Spread (1.815%). As a reference, if the perpetual notes were to reset at the time of this article, it would be reset to a coupon rate of 5.365% as at 15 Feb 2023 (5-year SOR @ 3.55% + initial spread 1.815%). So, will these bonds be refixed or will they be recalled?


Financial (3QFY22/23)

In its 3Q2022 results, MLT recorded an 8% YoY increase in its gross revenue from SGD166 million to SGD180 million. In tandem with higher gross revenue, MLT has also seen net property income (NPI) increase by 7.3% YoY. This was mainly due to the contribution from accretive acquisitions in 1QFY22/23 and FY21/22. However, revenue was weighed down slightly by the depreciation of foreign currencies mainly, Japanese Yen, South Korea Won, Chinese Renminbi and Australian Dollar against the Singapore Dollar. The amount distributable to unitholders was raised by 10.8% YoY from SGD96 million to SGD107 million, while distribution per unit (DPU) also grew by 1.9% YoY to 2.227 cents.


Stable Property portfolio

Source: Company’s Presentation


MLT’s portfolio of properties remain attractive with its occupancy rate increasing slightly to 96.9% as at 31 December 2022 from 96.4% in the previous quarter. The uplift in occupancy rate was attributable to higher occupancy in Singapore, Japan and China while Vietnam, Australia and India maintained 100% occupancy. MLT has also achieved a positive rental reversion of 2.9% and a weighted average lease expiry of 3.2 years for the period.


Credit Profile

As of 31 December 2022, MLT had SGD347.6 million of cash and cash equivalent; and in terms of its debt maturity profile, MLT has an average debt maturity duration of 3.6 years. Although approx. SGD863 million of debts (17% of total debt) are due for repayment in FY22/23 & FY23/24, MLT has sufficient committed credit facilities of SGD1.18 billion to refinance this short-term debt obligation.

Source: Company’s Presentation


In the current high interest rate environment, MLT have been proactively managing debts and approx. 83% of MLT’s total debt has been hedged into fixed rates and for the next 12 months of its income stream. 79% of it had been hedged into Singapore Dollar to mitigate any depreciation of foreign currencies. Currently, MLT’s average annualized interest rate is at 2.6%. In addition, as at 31 December 2022, MLT’s gearing ratio stood at 37.4% and had an interest coverage ratio of 4.3 times.


Will MLT 3.65% perpetual be refix?

Finally comes the key question. Will the 3.65% perpetual notes be recalled or refixed? These notes were issued on 28 September 2017 with an issue size of SGD180 million. Thus, with MLT’s prudent capital management and having $347.6 million of cash and cash equivalent, MLT should not face any difficulty in recalling the notes. However, in the event that MLT does not recall the perpetual bonds, the bonds will be refixed to a coupon range of approx. 5.3%, which is still fairly attractive as compared to ESR-LOGOS 5.5% perpetual notes, which are currently trading at 6% as at 15 Feb 2023. The ESR-LOGOS 5.5% perpetual notes will be due for a refix on 9 June 2027.


Company Overview

Mapletree Logistic Trust (MLT) is a Singapore-domiciled Real Estate Invest Trust which invests primarily in logistic real estate and real estate assets in the Asia Pacific region. Under MLT’s corporate structure, its sponsor is Mapletree Investment Pte Ltd and its Manager is Mapletree Logistics Trust Management Ltd. MLT has a credit rating of BBB+ (Fitch) and is listed on the Singapore Stock Exchange (SGX:M44U) with a market capital of SGD7.93bn as of 15 February 2023.


Mapletree Logistic Trust Comparisons

Despite REITs remaining subdued amidst an elevated inflation environment, MLT is head and shoulders among its peers with its properties reflecting resilience with stable occupancy while also proactively maintaining its prudent capital management.


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