Mapletree Industrial Trust Review @ 1 November 2020

 Basic Profile & Key Statistics

Mapletree Industrial Trust (MIT) invests in Business Park and Industrial properties, which include Data Centres as well. MIT owns 111 properties across Singapore, U.S. and Canada.

Quarter Performance Review

Gross revenue and NPI increased by 1.5% and 2% respectively. Share of joint ventures' results figure is less useful. A better way would be looking at distributions from the joint venture in cash flows statement, 2Q FY20/21 at S$ 11.899 million; 2Q FY19/20 at S$ 3.733 million, increased by 318.8%. DPU dropped marginally by 1%. 

Hi-Tech buildings (include data centres) and business parks have increased rental for new leases. Business parks have positive rental reversions. While flatted factories and ramp-up buildings have a lower rental for new leases and renewal leases.

MIT has completed the acquisition of the remaining 60% interest in 14 data centres in the United States on 1 Sep 2020 which was funded through private placement.

Lease Profile

Occupancy improved from 91.1% to 92.3%. WALE is slightly long at 4.2 years with the highest lease expiry of 38.2% falls in FY24/25 & beyond, without breakdown. Weighted average land lease expiry short at 46.58 years.

Debt Profile

Gearing ratio reduced slightly from 38.8% to 38.1%. Cost of debt is moderate at 2.7% with 100% unsecured debt. Fixed debt % is high at 93.8%. Interest cover ratio is high at 7.3 times. WADE is long at 3.2 years where the highest debt maturity of 28% falls in FY22/23. 

Diversification Profile

92.7% of income is from Singapore properties while the remaining is from U.S. and Canada. Top property, top tenant and top 10 tenans contributions are low at 10.9%, 8% and 30.1%.

Key Financial Metrics

Property yield, distribution on capital and distribution margin are high at 6.7%, 5% and 61.1% respectively. Management fees over distribution is slightly low in which unitholders receive S$ 7.69 for every dollar paid. All these figures are excluding retention of  S$7.1 million (equivalent to DPU of 0.32 cent) in 1QFY20/21 and S$6.6 million (equivalent to distribution per unit of 0.30 cent) in 4QFY19/20. 

Trends

Uptrend - DPU (include retention), NAV per Unit,

Slight Uptrend - Distribution Margin (include retention)  

Downtrend - Interest Cover Ratio, Property Yield

Interest cover ratio has been stabilized and improved since 4Q 2018.

Relative Valuation

i) Average Dividend Yield  - Average yield at 6.01%, apply the past 4 quarters DPU of 11.98 cents will get S$ 1.99. Include retention, DPU would be 12.6 cents, which will translate into S$ 2.10.

ii) Average Price/NAV - Average value at 1.37, apply the latest NAV of S$ 1.694 will get S$ 2.32.

Author's Opinion

Favorable	Less Favorable
100% Unsecured Debt	Short Weighted Average Land Lease Expiry
High Interest Cover Ratio	High Top Geographical Contribution
Long WADE	Property Yield Downtrend
Well Spread Debt Maturity
Low Top Property Contribution
Low Top Tenant & Top 10 Tenants Contributions
High Property Yield
Competitive Management Fee (include retention)
High Distribution on Capital
High Distribution Margin
DPU Uptrend (include retention)
NAV per Unit Uptrend

MIT is another Mapletree Family REIT that having strong fundamentals and performance which are unaffected by COVID-19. There are proposed acquisition and redevelopment works that would boost MIT performance. There is also one proposed divestment in which the gain would be distributed.

There is a proposed acquisition of data centre which is expected to complete by 1Q 2021. The purchase consideration is around 4.5% to 5.9% of existing MIT AUM (properties valuation + Interest in Joint Venture). 

Redevelopment of Kolam Ayer which is expected to complete by 2H 2022. 

Gain from this divestment of around S$ 19 million would be distributed for a period up to 3 years. This is classified under "distribution from asset disposal" in the key financial metrics.

For more information, you could refer to:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

REIT-TIREMENT Patreon - Support this blog as a Patron and get SREITs Dashboard PDF

REIT Investing Community - Facebook Group where members share and discuss REIT topic

*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions as well as loss, or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.