Mapletree Logistics Trust expects negative rental reversion in China amidst market alignment

The company said it will focus on occupancy rather than rent growth.

Mapletree Logistics Trust (MLT) expects continued negative rental reversions in China over the upcoming quarters as it aligns expiring rental rates with current market levels, its manager said during the annual general meeting (AGM) on 11 July.

The manager emphasised that China's challenging leasing environment is due to a slower-than-expected post-pandemic recovery and an oversupply of warehouse space, prompting tenants to avoid renewing leases and consider shorter-term agreements.

The manager said MLT has prioritised occupancy over rent growth, maintaining an occupancy rate of 93.2% in China as of 31 March.

Meanwhile, the expected decline in the new supply of logistics space in 2024 may drive the recovery of the logistics market and benefit MLT’s tenants in China, mainly composed of e-commerce and third-party logistics (3PL) operators.

In addition, MLT has completed the acquisition of 12 modern logistics properties with a total value of over $1.1b  and has made $200m in divestments of properties with older specifications in FY2023/24 as part of its portfolio rejuvenation strategy.

MLT plans to divest another three properties in Singapore and China with a combined value of around $337.4m. Proceeds from the divestments will be used for acquisitions of modern, Grade A assets with higher growth potential.