Mapletree Industrial Trust Review @ 10 May 2023

Basic Profile & Key Statistics

• Main Sector(s): Industrial & Office
• 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 across various clusters. However, the amount available for distribution declined mainly due combination of higher borrowing costs, higher tax expenses (after offsetting the deferred tax), a higher amount of management fees elected in cash and a slightly larger unitholder base. This resulted in DPU decline, despite this quarter having a higher amount for release of retention.

Rental Reversion

For renewal leases, business park buildings, flatted factories and stack-up buildings achieved higher rental rates. Similarly for the new leases rental rate, business park buildings, flatted factories and stack-up buildings achieved higher rates than passing rent. Unfortunately, for hi-tech buildings, the rental rate is declined and the rate for new leases is lower than passing rent.

Development

As of now, 161,163 & 165 Kallang Way have obtained TOP and expected to contribute income progressively in FY23/24.

Asset Enhancement Initiative

Installation of solar panels is completed for 5 properties cluster, which are Chai Chee Lane, Kampong Ubi, Kolam Ayer 5, Loyang 1 & 2 Clusters.

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 by 20% or more

Lease Profile

• Occupancy: ± 5% from median
• WALE:  ± 10% from median
• Highest Lease Expiry within 5 Years: Below median by 20% or more. Falls in FY25/26
• Weighted Average Land Lease Expiry: Below median by 20% or more

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: Above median by 20% or more
• Highest Debt Maturity within 5 Years: Below median by 10% or more; Falls in FY27/28
• Interest Coverage Ratio: Above median by 20% or more

Diversification Profile

• Top Geographical Contribution: ± 10% from median
• Top Property Contribution: Below median by 20% or more
• Top 5 Properties' Contribution: Below median by 20% or more
• Top Tenant Contribution: Below median by 20% or more
• Top 10 Tenants' Contribution: Below median by 10% or more

Key Financial Metrics

• Property Yield: Above median by 20% or more
• Management Fees over Operating Distributable Income: ± 10% from median; $5.95 distribution for every dollar paid 
• Operating Distributable Income on Capital: Above median by 20% or more
• Operating Distributable Income Margin: Above median by 20% or more
• Operating Distribution Proportion: Above median by 5% or more

DPU Breakdown

• TTM DPU Breakdown:
• 95.3% from Operation
• 1.6% from Management Fees Paid in Units
• 2.1% from Proceeds from Divestment
• 1% from Release of Retention/Capital

Trends

• Uptrend: DPU from Operation, NAV per Unit, Occupancy
• Slight Downtrend: Property Yield
• Downtrend: Interest Coverage Ratio, Operating Distributable Income on Capital, Operating Distributable Income Margin

Relative Valuation

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

Author's Opinion

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

The latest quarterly results show a decrease in DPU when compared to the previous quarter, even though there was a slight improvement in gross revenue and NPI. The primary reasons for this decline are rising borrowing costs and tax expenses. On the positive side, the company's debt that needs refinancing in the next 12 months is only 6.1%, and it has a fixed-rate debt at the SREITs median level. Additionally, the Kolam Ayer development has been completed and is expected to start contributing to income progressively in FY23/24.

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.