Mapletree Industrial Trust's 3Q FY24/25 Result Review

Basic Profile & Key Statistics

Key Indicators

Performance Highlight

Gross revenue and NPI have improved YoY mainly due to higher contributions from the Osaka Data Centre, newly acquired property in Japan and better performance across the portfolio. Distribution declared by joint ventures has declined significantly YoY due to higher borrowing costs. Overall, the amount available for distribution and DPU have improved slightly YoY amid the similar distribution from divestment gain.

Rental Reversion

The weighted average rental reversion stands at 9.8%, reflecting strong leasing momentum across the portfolio.

Acquisition

On 29 October, MIT completed the acquisition of a second property in Japan, further expanding its footprint in the region.

Asset Enhancement Initiative

MIT continues to enhance its portfolio’s sustainability and functionality. Four EV charging points were installed in the Woodlands Central Cluster, while solar panels have been deployed across multiple properties, including Kallang Basin 4, Kampong Ampat, Toa Payoh North 1, Kaki Bukit, Redhill 1 and Redhill 2 property clusters.

Related Parties Shareholding

• REIT Sponsor's Shareholding: Moderate
• REIT Manager's Shareholding: Moderate
• Directors of REIT Manager's Shareholding: Favorable

Lease Profile

• Committed Occupancy: Moderate
• Highest Annual Lease Expiry in 4 Years: Favorable
• WALE: Moderate
• Weighted Average Land Lease Expiry: Less Favorable

Debt Profile

• Adjusted Interest Coverage Ratio: Favorable
• Cost of Debt: Favorable
• Gearing Ratio: Moderate
• Fixed Rate Debt %: Moderate
• Unsecured Debt %: Favorable
• Highest Annual Debt Maturity in 4 Years: Moderate
• WADM: Moderate

Diversification Profile

• Top Geographical Contribution: Less Favorable
• Top Property Contribution: Moderate
• Top 5 Properties' Contribution: Favorable
• Top Tenant Contribution: Moderate
• Top 10 Tenants' Contribution: Favorable

Key Financial Metrics

• Property Yield: Less Favorable
• Management Fees over Operating Distributable Income: Moderate
• Operating Distributable Income on Capital: Favorable
• Operating Distributable Income Margin: Favorable
• Operating Distribution Proportion: Moderate

DPU Breakdown

• TTM Distribution Breakdown:
• 95.2% from Operation
• 1.7% from Management Fees Paid in Units
• 2.6% from Divestment Proceeds
• 0.5% being Retained

Trends (Up to 10 Years)

• Uptrend: DPU from Operations, NAV per Unit, Top 10 Tenants' Weightage
• Slight Downtrend: Operating Distribution Proportion
• Flat: Committed Occupancy
• Downtrend: Adjusted Interest Coverage Ratio, Top 5 Properties' Weightage, Property Yield, Operating Distributable Income over Manager's Fees, Operating Distributable Income on Capital, Operating Distributable Income Margin

Price Range & Relative Valuation Metrics

• Dividend Yield: Above +1SD for 1y, 3y & 5y; Average for 10y
• P/NAV: Below -1SD for 1y' Average for 3y, 5y & 10y

Author's Opinion

While gross revenue and NPI dipped slightly compared to the previous quarter, the amount available for distribution and DPU improved slightly. This was driven by lower property operating expenses, borrowing costs, and tax expenses. On the debt front, there is no refinancing requirement in this fiscal year, though 22.4% of debt is set to mature in the next fiscal year.

The recent breakthrough by Chinese AI - Deepseek, which demonstrated that the cost and resources required for AI development are significantly less demanding than U.S.-based AI technologies, has sent ripples through the market. This development particularly impacted the share prices of data centre REITs yesterday, including Keppel DC REIT and Digital Core REIT. Given that Mapletree Industrial Trust (MIT) has 55.9% of its AUM allocated to data centres, its share price has also been affected by these market dynamics.

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*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my findings and should not be considered professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.