Mapletree Industrial Trust Review @ 6 August 2021

Basic Profile & Key Statistics

Mapletree Industrial Trust (MIT) invests in Business Park and Industrial properties, including Data Centers. MIT owns 114 properties across Singapore, U.S. and Canada.

Performance Highlight

Gross revenue, NPI, distributable income and DPU have improved YoY due to contribution from North America data centres and the absence of rental relief.

Overall, the rental rate after the renewal is close to the rental rate before renewal, besides business park buildings having negative rental revision. For new leases, besides flatted factories, all are higher than the existing rental rate, with hi-tech buildings having the biggest difference. 

The acquisition of 29 data centres in U.S. has completed on 22 Jul 2021. This acquisition is funded by a combination of debt, private placement and preferential offers. This acquisition is expected to be both DPU and NAV accretive.

The divestment of 26A Ayer Rajah Crescent is completed on 25 Jun 2021. The divestment gain of S$ 15.7 million would be distributed over 2 years starting next quarter.

Redevelopment of Kolam Ayer 2 is ongoing. The 3rd building is awarded in May and is expected to be completed in 1H 2023.

Related Parties Shareholding

• REIT sponsor's shareholding is slightly low at 24.32%
• REIT manager's shareholding is low at 0.73%
• Directors of REIT manager's shareholding is moderate at 0.14%

Lease Profile

• Occupancy is moderate at 94.3%
• WALE is moderate at 3.7 years
• Highest lease expiry within 5 years is moderate at 25.7% which falls in FY23/24
• Weighted Average Land Lease Expiry is  short at 44.61 years

Debt Profile

• Gearing ratio is low at 31%
• Cost of debt is slightly how at 2.7%
• Fixed rate debt % is high at 95.8%
• All debts are unsecured debts
• WADM is moderate at 2.8 years
• Highest debt maturity within 5 years is low at 21.4% which falls in FY24/25
• Interest coverage ratio is high at 6.3 times
• Perpetual securities over debts is slightly high at 14.2%

Diversification Profile

• Top geographical contribution is high at 85.1% 
• Top property contribution is low at 9.6% 
• Top 5 properties contribution is low at 32.2% 
• Top tenant contribution is low at 7.4% 
• Top 10 tenants contribution is low at 32.6%

Key Financial Metrics

• Property yield is high at 6.8% 
• Management fees over distribution is moderate at 13.7% in which unitholders receive S$ 7.30 for every dollar paid 
• Distribution on capital is high at 4.9%
• Distribution margin is high at 60.3%

Trends

• Uptrend - DPU, NAV per Unit 
• Flat - Distribution Margin
• Slight Downtrend - Property Yield
• Downtrend - Interest Coverage Ratio, Distribution on Capital

Relative Valuation

• P/NAV - Average for 1y; Above average for 3y; Higher than +1SD for 5y
• Dividend Yield - Average for 1y; Lower than average for 3y; Lower than -1SD for 5y

Author's Opinion

Favorable	Less Favorable
Diversified Sector	Low REIT Manager's Shareholding
Low Gearing Ratio	Short Weighted Average Land Lease Expiry
High Fixed Rate Debt	High Top Geographical Contribution
100% Unsecured Debt	Interest Coverage Ratio Downtrend
Well Spread Debt Maturity	Distribution on Capital Downtrend
High Interest Coverage Ratio
Low Top Property & Top 5 Properties Contributions
Low Top Tenant & Top 10 Tenants Contributions
High Property Yield
High Distribution on Capital
High Distribution Margin
DPU Uptrend
NAV per Unit Uptrend

MIT has delivered a solid performance and improved DPU despite an enlarged unitholders base. With the newly acquired data centers, the performance is expected to be improved further.

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*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 and 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.