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

Yesterday, Mapletree Industrial Trust (SGX: ME8U), or MIT, released its first-quarter earnings report for the financial year ended 30 June 2017 (FY17/18).

As it name implies, the REIT focuses on the industrial sector and has 86 properties valued at $3.77 billion, as of 31 June 2017. You can learn more about the company here or catch the previous quarter’s earnings here.

Financial Highlights

Here’s a rundown on the REIT’s financial figures:

1. Gross revenue rose to S$88.8 million in the fiscal first-quarter, up 5.6% from the same quarter a year ago.

2. Net property income (NPI) rose by 6.9 % year-on-year. For the first-quarter, NPI came in at S$68.1 million.

3. Distribution per unit (DPU) for the reporting quarter was 2.92 cents, up from the DPU of 2.85 cents a year ago.  

4. As mentioned, Mapletree Industrial Trust’s properties are valued at S$3.77 billion, as of 30 June 2017. The REIT had an net asset value per unit of $1.40.

Foolish investors might want to keep up an eye on the REIT’s debt profile. The debt profile may provide clues on how the REIT is funded and its sensitivity to the interest rate environment. This is summarised below:

Source: Mapletree Industrial Trust’s Earnings Presentation

Mapletree Industrial Trust’s gearing was 29.8% as of 30 June 2017, slightly higher compared to a year ago. Borrowing cost also rose to 2.8% while interest rate coverage fell to 7.2 times. On the refinancing front, 10% of its loans are due in the current fiscal year. Foolish investors should keep a watchful eye on the progress in refinancing of debt.

Operational Highlights

Mapletree Industrial Trust ended the quarter with a portfolio occupancy of 92.6%, a slight dip as compared to the figure of 93.1% recorded in the prior quarter.

The REIT also had a weighted average lease term to expiry of about 3.1 years (by gross rental income). Approximately 20.4% of the REIT’s leases are up for renewal in FY17/8, down from 28.2% the previous quarter. Mapletree Industrial Trust ended the quarter with an average rental rate of S$1.95 per square feet per month.

Tham Kuo Wei, Chief Executive Officer of the Manager, summarised the quarter in a few words:

“MIT has delivered another set of consistent financial results notwithstanding the headwinds in the Singapore industrial property market.

The year-on-year growths in distributable income and DPU were driven mainly by revenue contribution from Phase One of the BTS development for HP.

The completion of the redevelopment of Flatted Factories at the Telok Blangah Cluster into a world-class facility for HP affirmed the successful execution of our strategy to grow the HiTech Buildings segment.

With a low aggregate leverage of 29.8% as at 30 June 2017, we have sufficient headroom to support the pursuit of investment opportunities to grow the portfolio.”

The management expects conditions to remain uncertain:

“The business environment remains uncertain despite positive signs from the manufacturing sector in Singapore. 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.”

Foolish summary

Mapletree Industrial Trust last traded at $1.88 on Tuesday. The REIT had a price-to-book ratio of 1.34 and a distribution yield of around 6.1%.

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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.