9 Things Investors Should Know About Mapletree Industrial Trust’s Latest Earnings Update

Yesterday, Mapletree Industrial Trust (SGX: ME8U) released its first quarter earnings update for its financial year ending 31 March 2019 (FY18/19). As a quick introduction, Mapletree Industrial Trust’s portfolio consists of 86 industrial properties in Singapore and 14 data centres in the US.

Here are nine things investors should know about the REIT’s latest results:

1. Gross revenue for the reporting quarter grew 3.0% year-on-year to S$91.5 million while net property income improved by 1.9% to S$69.5 million.

2. Similarly, the REIT’s distribution per unit (DPU) was up by 2.7% year-on-year to 3.00 cents.

3. Based on Mapletree Industrial Trust’s annualised DPU of 12.0 cents (calculated using its year-to-date DPU of 3.0 cents) and its closing unit price of S$2.02 as of 24 July 2018, the REIT has an annualised distribution yield of 5.9%.

4. As of 30 June 2018, the REIT’s gearing ratio stood at 35.0%, which is a safe distance from the regulatory ceiling of 45%.

5. The REIT’s portfolio had an occupancy rate of 88.3% at the end of the reporting quarter.

6. The weighted average lease to expiry (by gross rental income) for Mapletree Industrial Trust’s portfolio was 3.7 years as of 30 June 2018. 33.7% of the REIT’s leases will expire by FY19/20, 36.6% will expire in the following two years (FY20/21 and FY21/22), while the remaining leases will expire after FY22/23.

7. Mapletree Industrial Trust had over 2,000 tenants as of 30 June 2018. Its top 10 tenants currently form just 25.9 % of its overall gross rental income.

8. Mapletree Industrial Trust completed the development of a build-to-suit (BTS) project, Mapletree Sunview, on 13 July 2018 for S$76 million. It also acquired 7 Tai Seng Drive for S$68 million on 27 June 2018.

9. This is what Mapletree Industrial Trust had to say about its outlook in its earnings update:

“The wider economy and business sentiments of small and medium enterprises in Singapore remain robust. However, looming uncertainties stemming from heightened global political and trade tensions continue to threaten the projected growth momentum. Furthermore, the continuing supply of competing industrial space is exerting pressure on both occupancy and rental rates. The Manager will continue to focus on tenant retention to maintain a stable portfolio occupancy.

Several key drivers such as the movement to cloud and outsourcing as well as the need for data to be stored close to its end users and for geographical diversity are expected to contribute to the growing demand in the United States for leased data centre space. Between 2017 and 2022F, the demand for leased data centre space (by net utilised square feet) in the United States is expected to grow at a compound annual growth rate (“CAGR”) of 8.7%, faster than the CAGR of 6.8% for the supply of leased data centre space (by net operational square feet).”

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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 Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has a recommendation for Mapletree Industrial Trust.