Citi analyst Brandon Lee has downgraded Mapletree Logistics Trust from “buy” to “neutral” with a lowered target price of $1.75. This is in light of benign forward DPU growth with a three-year CAGR of 1% as compared to a five-year historical CAGR of 3.4% observed by Lee, and a subdued acquisitions outlook on rising cost of capital, especially that of debt.
Most recently, MLT has acquired $100 million of assets year-to-date (ytd), a decrease from its five-year-average of $1.2 billion. According to Lee, the decline in acquisition spending is due to rising debt cost, increasing equity costs, as well as flattish prime logistics cap rates, which may end up narrowing cap rate spreads and complicating distribution per unit (DPU) accretion.
MLT traded at 1.3x P/B from FY2017-FY2021 when acquisition per year was $1.2 billion.