THE distribution per unit (DPU) of (MLT) fell by 10.6 per cent to S$0.02027 for the second quarter ended Sep 30, on the back of higher borrowing costs and lower revenue contributions from China.
The real estate investment trust’s net property income fell by 2.1 per cent in Q2 FY25 to S$158.6 million, from S$162 million in the year-ago period.
Revenue for the quarter dipped 1.8 per cent to S$183.3 million, mainly due to lower contribution from China, the absence of contribution from divested properties, and depreciation of various regional currencies against the Singapore dollar, MLT’s manager said on Tuesday (Oct 22).
The decline was partially mitigated by its stronger performance in Singapore and Australia, and contributions from recent acquisitions, it said.
MLT’s distributable income for the second quarter fell to S$102.3 million, 9.1 per cent lower than the S$112.5 million recorded the year before. The distribution will be paid on Dec 17.
The Reit’s borrowing costs rose 8.2 per cent to S$39.8 million from S$36.8 million in the year before. MLT booked lower divestment gains of S$6.1 million in Q2 FY25, down from the S$8.8 million in Q2 FY24.
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Jean Kam, chief executive officer of MLT’s manager, said: “Amid ongoing macroeconomic uncertainty, our teams’ continued focus on active lease management and tenant engagement has resulted in improved portfolio occupancy of 96 per cent and positive rental reversions across most markets.
“We are optimising our debt mix to proactively manage the impact of higher borrowing costs, a significant headwind which we continue to face. Over the quarter, we swapped a portion of USD, AUD and HKD loans into CNH, capitalising on China’s lower interest rates.”
She said the Reit’s manager remains focused on the execution of its portfolio rejuvenation strategy, which will bolster its resilience over the long term.
In the second quarter, MLT completed the divestments of two properties in Malaysia and Singapore, and announced the divestment of another three properties in Malaysia.
Its manager said: “Totalling S$100 million in sale value and executed at an average premium to valuation of 15 per cent, these divestments will provide MLT the financial flexibility to recycle capital into acquisitions of assets with higher growth potential.”
MLT’s portfolio achieved positive rental reversions across most markets, except for China, which registered negative rental reversion of -12.2 per cent.
The manager added: “Rising geopolitical uncertainty and growing trade tensions continue to weigh on business and consumer sentiment. China remains challenging, and negative rental reversions are expected to continue.”
In H1, revenue stood at S$365 million, down slightly from S$368.9 million in the corresponding year-ago period. Net property income fell to S$315.3 million from S$320 million previously.
MLT’s manager said that it expects higher borrowing costs will continue to exert pressure on the Reit’s distributions, as replacement loans and hedges will be at higher-than-existing rates.
“The manager will focus on executing its disciplined multi-year hedging strategy, which has helped contain MLT’s effective cost of debt amid rising interest rates, and mitigated the impact of depreciating regional currencies.
“The manager remains committed to building resilience through its portfolio rejuvenation strategy of accretive acquisitions, strategic asset enhancements and selective divestments of lower-yielding assets with limited redevelopment potential that are no longer aligned with MLT’s strategy.”
Units of MLT closed down 0.7 per cent or S$0.01 at S$1.41 on Tuesday before the announcement.
