Mapletree Logistics Trust braces for thinner margins as occupancy declines

Due to asset conversions.

Analysts warned that a bumpy road is ahead for Mapletree Logistics Trust in the coming quarters. This follows MLT’s soft set of Q4 results, wherein it reported that overall occupancy dipped to 96.7% in the fourth quarter compared to 98.3% in the same quarter last year.

The dip in occupancy was driven by downtime at several Singapore properties that were converted from single-user assets (SUAs) to multi-tenanted buildings (MTBs) during the year.

OCBC analyst Andy Wong noted that more properties in MLT’s portfolio will undergo conversions in upcoming quarters.

“As most of the SUAs in Singapore are expected to be converted to MTBs, we continue to see some pressure on MLT’s occupancy rate and margins,” stated Wong.

Meanwhile, CIMB analyst Pang Ti Wee stated that MLT is likely to rely on yield-accretive acquisitions to drive growth while it transforms its local portfolio.

“Future occupancy at its Singapore portfolio is expected to dip as MLT converts more of its properties from STBs to MTBs. With both margins and occupancy expected to come under pressure, we expect MLT to rely on inorganic growth to make up for the potential weakness,” Pang wrote.

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