Mapletree Industrial Trust Review @ 26 January 2023

Basic Profile & Key Statistics

• Main Sector(s): Industrial
• Country(s) with Assets: Singapore, United States & Canada
• No. of Properties (exclude development/associate/fund): 141

Key Indicators

Performance Highlight

Gross revenue and NPI improve yoy mainly due to contributions from new leases for Singapore properties. However, the amount available for distribution and DPU declined slightly mainly due to higher borrowing costs, higher management fees and a slightly larger unitholder base.

Rental Reversion

For renewal leases, hi-tech buildings, flatted factories and stack-up buildings achieved higher rental rates, while business parks remain similar. As for the new leases rental rate, the hi-tech building achieved a significantly higher rate, while flatted factories declined slightly and business parks decline more than 10%.

Development

The redevelopment of Kolam Ayer 2 is expected to be completed in phases where 165 Kallang Way obtained TOP while 163 &161 Kallang Way are to be in 1H2023. 

Asset Enhancement Initiative

Installation of solar panels is completed for Loyang 1 & 2. Installation for the remaining 3 properties is expected to be completed by 1Q 2023, slightly delayed from the previous targetted 4Q 2022.

Sensitivity to Interest Rate

For every 1% increase in interest rate, the DPU impact would be around 1.5%.

Distribution Breakdown

• Distributable Income Breakdown:
• 95.4% from Operation
• 0.8% from Release of Retention/Capital
• 1.7% from Fees Paid/Payable in Units
• 2.1% from Proceeds from Divestment
• Distribution = 100% of Distributable Income
• Distribution to Perpetual Securities Holder = 2.6% of Distributable Income

Related Parties Shareholding

• REIT sponsor's shareholding: ± 10% from median
• REIT manager's shareholding: ± 10% from median
• Directors of REIT manager's shareholding: Above median for more than 20%

Lease Profile

• Occupancy: ± 5% from median
• WALE:  ± 10% from median
• Highest lease expiry within 5 years: Below median for more than 20%. Falls in FY25/26
• Weighted average land lease expiry: Below median for more than 20%

Debt Profile

• Gearing ratio: ± 10% from median
• Gearing ratio including perps: ± 10% from median
• Cost of debt: ± 10% from median
• Fixed rate debt %: ± 10% from median
• Unsecured debt %: 100%
• WADM: ± 10% from median
• Highest debt maturity within 5 years: ± 10% from median; Falls in FY26/27
• Interest coverage ratio: Above median for more than 20%

Diversification Profile

• Top geographical contribution: ± 10% from median
• Top property contribution: Below median for more than 20%
• Top 5 properties' contribution: Below median for more than 20%
• Top tenant contribution: Below median for more than 20%
• Top 10 tenants' contribution: Below median for more than 20%

Key Financial Metrics

• Property yield: Above median for more than 20%
• Management fees over distribution: ± 10% from median; $6.29 distribution for every dollar paid 
• Distribution on capital: Above median for more than 20%
• Distribution margin: ± 10% from median

Trends

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

Relative Valuation

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

Author's Opinion

Favorable	Less Favorable
High Directors of REIT Manager's Shareholding	Short Weighted Average Land Leases Expiry
Well Spread Lease Expiry	Interest Coverage Ratio Downtrend
100% Unsecured Debt	Distribution on Capital Downtrend
High Interest Coverage Ratio	Distribution Margin Downtrend
Low Top Property & Top 5 Properties Contributions
Low Top Tenant & Top 10 Tenants Contributions
High Property Yield
High Distribution on Capital
DPU Uptrend
NAV per Unit Uptrend
Occupancy Uptrend

Fundamental remains resilient although the performance has declined slightly as compared to the previous quarter, with lower gross revenue/NPI coupled with higher borrowing costs. The increasing borrowing costs continue to affect the DPU and there is also an 11.8% of debt maturity by 31 March 2023. 

By the way, the manager has disclosed the "Distribution to Unitholders" figure for this quarter, it would be perfect if the manager could disclose the breakdown (Note A like other REITs) of the "adjustment for net effect of non-tax chargeable items and other adjustments" in the distribution statement for upcoming financial statements.

You could also refer below for more information:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and detail of Singapore REIT

REIT Review - List of previous REIT review posts

And you could join the following to support my work:

Singapore REITs Post Telegram Channel - Join to receive posts for Singapore REITs

REIT-TIREMENT Patreon - Support my work and get exclusive content

REIT-TIREMENT Facebook Page - Support by liking my Facebook Page

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

*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 own findings and should not be considered as 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.