3 Surprising Things Investors May Not Realize About Mapletree Industrial Trust

Credit: Axisadman

Mapletree Industrial Trust  (SGX: ME8U) has been one of the best long-term performers amongst the billion-dollar real estate stocks in Singapore.

As it name implies, the real estate investment trust (REIT) focuses on the industrial property sector. As of 31 March 2016, it has 85 properties in its portfolio that are valued at $3.6 billion.

In early March, Mapletree Industrial Trust posted a slide deck it had used for an investor presentation. It contained information about the REIT that investors may not be aware of. Here are three.

The rise in DPU  

In the slide below, Mapletree Industrial Trust highlights the growth of its distribution per unit over the past six years.

2017-04-06 Mapletree Industrial Trust DPU
Source: Mapletree Industrial Trust’s investor presentation

The industrial property sector has traditionally been a tough space to operate in. Demand for industrial space can be subject to economic cycles. And over the timeframe shown in the slide above, Mapletree Industrial Trust’s occupancy rate has gone as high as 95.5% and fallen as low as 90.2%.

However, in that same duration, the REIT’s DPU has steadily increased. Mapletree Industrial Trust’s DPU was 8.41 cents in its financial year ending 31 March 2012 (FY11/12). The DPU figure in FY15/16 was 32.6% higher at 11.15 cents.

High tenant retention

It turns out that Mapletree Industrial Trust has been quite adept at keeping its tenants around.

2017-04-06 Mapletree Industrial Trust Customer
Source: Mapletree Industrial Trust’s investor presentation

The graph above shows that over 64% of the REIT’s tenants have been staying with it for more than four years. Despite the industrial nature of its properties, Mapletree Industrial Trust has had the ability to retain its tenants for the long haul.

Furthermore, it has also been able to keep its tenant retention rate at 75.5% in its latest quarter. Higher retention could lead to better predictability for the REIT’s revenue base.

A focus on build-to-suit (BTS) properties

Mapletree Industrial Trust has grown its property base over the last six years, but it might not be in quite the manner that investors think.

2017-04-06 Mapletree Industrial Trust M&A
Source: Mapletree Industrial Trust’s investor presentation

Over the period shown in the slide, Mapletree Industrial Trust acquired two properties but also completed four build-to-suit (BTS) property projects. On top of that, the REIT also undertook three asset enhancement initiatives.

Mapletree Industrial Trust could benefit from long term leases for its BTS projects. For instance, its BTS data centre with Equinix has a minimum tenure of 20 years.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.