Mapletree Industrial Trust’s Latest Earnings: What Investors Should Know

Credit: Axisadman

Yesterday, Mapletree Industrial Trust  (SGX: ME8U) released its fourth quarter and full year earnings report for its financial year ending 31 March 2017 (FY16/17).

As its name implies, Mapletree Industrial Trust focuses on the industrial real estate sector and has 86 properties valued at S$3.7 billion, as of 31 March 2017. You can catch the results from the REIT’s previous quarter here.

Financial highlights

The following’s a rundown on some of Mapletree Industrial Trust’s latest financial figures:

1. Gross revenue rose 4.5% from the same quarter a year ago to S$87.8 million. For the full fiscal year, gross revenue was $340.6 million, an increase of 2.7%.

2. Net property income (NPI) for the quarter climbed 6.4% year-on-year to S$65.9 million. FY16/17’s NPI was up 4.8% to $256.8 million.

3. Distribution per unit (DPU) for the reporting quarter was 2.88 cents, up from the DPU of 2.83 cents a year ago. DPU for the full fiscal year was 11.39 cents, up from 11.15 cents a year ago.

4. Mapletree Industrial Trust’s properties are valued at S$3.7 billion as of 31 March 2017. The REIT ended FY16/17 with a net asset value per unit of $1.40, an increase of 2.2% from the end of FY15/16.

Let’s look at the REIT’s debt profile next.

2017-04-24 Mapletree Industrial Trust Debt Table
Source: Mapletree Industrial Trust’s earnings presentations

Mapletree Industrial Trust’s gearing rose slightly to 29.2% as of 31 March 2017. Its weighted average all-in funding cost also stepped up to 2.7% while its interest coverage ratio slipped to 7.7 times. Around 10.4% of the REIT’s loans have to be refinanced in FY17/18. Foolish investors should keep a watchful eye on the REIT’s progress in the refinancing of its debt.

Operational highlights and the future outlook

Mapletree Industrial Trust ended FY16/17 with an overall 93.1% portfolio occupancy rate, up from the 92.1% recorded in the prior quarter, but down from the 94.6% seen a year ago.

The REIT also currently has a weighted average lease term to expiry of about 3.1 years (by gross rental income). Approximately 28.2% of its total leases are up for renewal in FY17/18.

Mapletree Industrial Trust reported an average rental rate of S$1.94 per square feet per month for the fourth quarter of FY16/17. This represents a sequential (the third quarter of FY16/17 had a rental rate of S$1.93) as well as year-on-year increase (the fourth quarter of FY15/16 had a rental rate of S$1.90).

Tham Kuo Wei, the chief executive officer of the REIT’s Manager, summarized the financial year in a few words:

“MIT [Mapletree Industrial Trust] delivered higher DPU in FY16/17 amid the uncertain business environment as all property segments registered higher rental rates coupled with initial contribution from Phase One of the BTS development for Hewlett-Packard and lower property expenses.

We expect the Hi-Tech Buildings segment to be a significant growth driver as we progressively complete development projects including the recently announced BTS data centre which has commenced construction.”

Despite the REIT showing growth in its latest set of results, its Manager expects conditions to remain challenging:

“Despite positive data about the manufacturing sector in Singapore, the business environment remains uncertain amid global trade uncertainties and rising interest rates. The continued supply of competing industrial space and movement of tenants are expected to exert pressure on rental and occupancy rates. The Manager continues to focus on tenant retention to maintain a stable portfolio occupancy.”

Mapletree Industrial Trust’s units closed at $1.79 each on Tuesday. This translates to a historical price-to-book ratio of 1.28 and a distribution yield of around 6.4%.

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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.