Mapletree Industrial Trust Review @ 15 February 2021

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.

Performance Review

Gross revenue, NPI, distributable income increased YoY by 20.5% and 20.8% respectively mainly due to revenue from the 14 data centres in the U.S. which previously held under MRDCT. Distributable income increased by 16.8% YoY while DPU increase by 3.8% YoY due to enlarged unitholders based. There is a retention of  S$7.1 million from 1QFY20/21 and S$6.6 million from 4QFY19/20. 

In this quarter, MIT has slight negative rental reversion for all types of property after renewal. 

MLT announced a proposed acquisition for a data centre in Virginia on 14 September 2020 where detail would only be released upon finalization. As for the proposed divestment of 26A Ayer Rajah Crescent, target completion is in 2Q 2021. 

Construction of 2 buildings for Kolam Ayer 2 has been started and overall expected to be complete in 2H 2022.

Lease Profile

• Occupancy is moderate at 93.1%
• WALE is moderate at 4.1 years
• Highest lease expiry within 5 years is high at 34% which falls in FY25/26 and beyond, without breakdown.
• Weighted average land lease expiry is short at 46.33 years

Debt Profile

• Gearing ratio is moderate at 37.3%
• Cost of debt is moderate at 2.9%
• Fixed rate debt % is high at 96.2%
• All debts are unsecured debt
• WADE is long at 3.2 years 
• Highest debt maturity within 5 years is slightly low at 28.4% which falls in FY22/23
• Interest coverage ratio is high at 7.2 times

Diversification Profile

• Top geographical contribution is high at 91.5%
• Top property contribution is low at 10.9%
• Top tenant contribution is low at 7.7% 
• Top 10 tenants contribution is slightly low at 31.2% 

Key Financial Metrics

• Property yield is high at 6.8%
• Management fees over distribution is slightly low at 13.2% in which unitholders receive S$ 7.58 for every dollar paid (include retention, management fees over distribution is competitive at 12.6%, in which unitholders receive S$ 7.94 for every dollar paid)
• Distribution on capital is high at 5% (include retention, distribution on capital is high at 5.3%)
• Distribution margin is high at 59.8% (include retention, distribution margin is high at 62.8%)

Trends

• Uptrend - DPU, NAV per Unit
• Slight Uptrend - Distribution Margin (Include retention)
• Slight Downtrend - Distribution on Capital (Include retention)
• Downtrend - Interest Coverage Ratio, Property Yield

Relative Valuation

• Dividend Yield - Past 4 quarters DPU @ 12.1 cents / average yield @ 5.81% = S$ 2.08 (include retention, DPU @ 12.72 cents which translates into S$ 2.19)
• Price/NAV - NAV @ S$ 1.696 x average P/NAV @ 1.4 = S$ 2.37

Author's Opinion

Favorable	Less Favorable
100% Unsecured Debt	Short Weighted Average Land Lease Expiry
Long WADE	High Top Geographical Contribution
High Interest Coverage Ratio	Interest Coverage Ratio Downtrend
Low Top Property Contribution	Property Yield Downtrend
Low Top Tenant & Top 10 Tenants Contribution
High Property Yield
Competitive Management Fees (Include Retention)
High Distribution on Capital
High Distribution Margin
DPU Uptrend
NAV per Unit Uptrend

Occupancy has seen improvement this year and income has been improved with the full contribution from the remaining 60% interest in 14 data centres in U.S. Moving forward, the acquisition of the data centre in Virginia would also further boost its performance upon completion.

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

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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee the 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.