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Tuesday, May 04, 2021

Mapletree Industrial Trust Review @ 4 May 2021

Basic Profile & Key Statistics

Mapletree Industrial Trust (MIT) invests in Business Park and Industrial properties, which include Data Centres as well. MIT owns 115 properties across Singapore, U.S. and Canada.

Performance Highlight

Gross revenue, NPI and distributable income increased YoY by 18.9%, 17.3% and 2.3% respectively mainly due to the consolidation of revenue from the 14 data centres in the United States of America previously held under MRDCT and partly offset by rental reliefs granted to eligible tenants. Without the S$ 7.1 million retention release on 4Q FY20/21 and add back the S$ 6.6 million retention withheld on FY19/20, the DPU would be 3.03 cents and 3.15 cents, which means DPU decreased by 3.8% YoY.
MIT has slight negative rental reversion for hi-tech buildings, flatted factories and stack up/ramp up buildings after renewal. However, the price per square foot is high for new hi-tech building new leases.
The acquisition of 8011 Villa Park Drive is completed. However, there won't be any rental income from 13 Mar 2021 to 10 Jun 2022. Instead, the vendor provided an upfront discount of US$16.9 million on the purchase consideration.
Divestment of 26A Ayer Rajah Crescent is expected to complete in 2Q 2021.
For the redevelopment of Kolam Ayer 2, construction of 2 buildings has commenced. Target completion in 2H2022.

Related Parties Shareholding

  • REIT sponsor's shareholding is moderate at 27.48%
  • REIT manager's shareholding is low at 0.78%
  • Directors of REIT manager's shareholding is slightly high at 0.16%

Lease Profile

  • Occupancy is moderate at 93.7%
  • WALE is moderate at 4 years
  • Highest lease expiry within 5 years is slightly low at 24.7% which falls in FY23/24
  • Weighted average land lease expiry is short at 46.08 years  (to be updated after release of annual report)

Debt Profile

  • Gearing ratio is slightly high at 40.3%
  • Cost of debt is high at 2.8%
  • Fixed rate debt % is moderate at 76%
  • All debts are unsecured debts
  • WADM is long at 3.6 years
  • Highest debt maturity within 5 years is low at 23.7% which falls in FY25/26
  • Interest coverage ratio is high at 6.4 times

Diversification Profile

  • Top geographical contribution is high at 92.5%
  • Top property contribution is low at 10.9% (to be updated after release of annual report)
  • Top 5 properties contribution is low at 36% (to be updated after release of annual report)
  • Top tenant contribution is low at 7.6% 
  • Top 10 tenants contribution is low at 32.2% 

Key Financial Metrics

  • Property yield is high at 6.7% 
  • Management fees over distribution is moderate at 13.6% in which unitholders receive S$ 7.35 for every dollar paid 
  • Distribution on capital is high at 4.9%
  • Distribution margin is high at 59.6%
Include retention, management fees over distribution, distribution on capital and distribution margin would be 13.3%, 5.1% and 61% respectively.

Trends

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

Relative Valuation

  • Dividend Yield - Past 4 quarters DPU @ 12.55 cents / average yield @ 5.68% = S$ 2.21. Include retention, DPU @ 12.83 which translate into S$ 2.26.
  • Price/NAV - NAV @ S$ 1.66 x average P/NAV @ 1.43 = S$ 2.37


Author's Opinion

 Favorable Less Favorable
Diversified SectorLow Manager's Shareholding
100% Unsecured DebtShort Weighted Average Land Lease Expiry
Long WADMHigh Cost of Debt
Well Spread Debt MaturityHigh Top Geographical Contribution
High Interest Coverage RatioInterest Coverage Ratio Downtrend
Low Top Property & Top 5 Properties ContributionsProperty Yield Downtrend
Low Top Tenant & Top 10 Tenants ContributionsDistribution on Capital Downtrend
High Property Yield 
High Distribution on Capital 
High Distribution Margin 
DPU Uptrend 
NAV per Unit Uptrend

MIT fundamental remains solid despite a slight drop in income as compared to last quarter. There is still a S$ 6.6 million unreleased retention withheld from 4QFY19/20. 


For more information, you could refer to:

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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 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.

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