Mitsubishi Estate Logistics REIT Investment (3481) Q2 2024 earnings summary

Executive summary

• 15th FP delivered 11 consecutive periods of revenue, profit and DPU growth; NOI rose 5.2% to ¥6,359mn and DPU increased 3.2% to ¥8,083.

• Portfolio expansion and rent growth supported results; period-end occupancy was 99.9% across 34 properties.

• Replacing older MJ Logipark Sendai 1 with newer MJ Logipark Ichinomiya 1 is intended to improve portfolio profitability and generate gains for unitholders.

Financial highlights

• Six-month revenue was ¥7.746bn, operating income ¥4.035bn, ordinary income ¥3.720bn and net income ¥3.719bn; revenue rose 3.1% YoY and net income 6.0%.

• Operating rental revenue increased ¥219mn, mainly from acquired properties and rent growth at existing properties; NOI increased from ¥6,045mn to ¥6,359mn.

• DPU was ¥8,083, up ¥251 QoQ; this comprised ¥7,387 from earnings and ¥696 in surplus cash distributions.

• FFO per unit was ¥10,091, AFFO per unit ¥8,821, AFFO payout ratio 91.6% and NAV per unit ¥397,624.

Outlook and guidance

• Forecast DPU is ¥9,382 for Aug. 2024 and ¥9,441 for Feb. 2025, including Sendai 1 disposition gains of ¥1,392mn and ¥1,361mn, respectively.

• Stabilized DPU, excluding disposition gains and temporary fluctuations, is forecast to reach ¥8,196 by 17th FP; rent revisions and asset replacement support growth.

• Rent growth is expected for 13 consecutive fiscal periods through 16th FP; 90% of expirations had completed negotiations or agreed terms, with ~6% rent increases anticipated.

• Long-term asset-size target is ¥300bn; post-replacement asset size is projected at ¥269.5bn, with acquisition capacity of ~¥25bn at LTV up to 45%.