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Mapletree Industrial Trust’s Latest Earnings: Slight Raise In DPU

Mapletree Industrial Trust (SGX: ME8U) reported higher distribution per unit (DPU) on Tuesday, lifted by growth from its new properties and acquisitions.

The latest report was for the second-quarter earnings results for fiscal year ending on 31 March 2019 (FY18/19). Mapletree Industrial Trust is an industrial-based real estate investment trust (REIT) with 86 industrial properties and 14 data centres. Geographically, its properties are located in Singapore and United States and have a book value of S$4.4 billion.

Let’s take a quick look at the results.

  1. Gross revenue for the reporting quarter decreased by 0.4% year-on-year to S$92.5 million while net property income declined by 0.1% to S$70.68 million.
  2. Notably, revenue for the second quarter a year ago was boosted by an early termination by a key tenant. Mapletree Industrial Trust’s revenue would have risen 3.1% year-on-year if the effect of the termination was excluded.
  3. Distributable income rose 4.9% to S$56.3 million over the same period, resulting in a 0.3% uptick in distribution per unit (DPU) which came in at 3.01 cents. The increase in distributable income was due to profit contribution from the 14 data centres in the United States in which Mapletree Industrial Trust has a 40% interest.
  4. Next, let’s look at Mapletree Industrial Trust’s debt profile. As of 30 September 2018, the REIT’s gearing stood at 35.1%, remaining stable compared to the previous quarter. Meanwhile, Mapletree Industrial Trust’s weighted average annualized interest rate stood at 3.0% with an average debt duration of 2.9 years. Around 78% of the REIT’s debt was on fixed-rate loans.
  5. Moving on, we can take a look at Mapletree Industrial Trust’s operational statistics. The REIT’s portfolio had a committed occupancy rate of 86.7% at the end of the quarter, which is a slight decline from the occupancy of 88.3% recorded at the end of June.
  6. Looking at the Singapore portfolio which makes up the bulk of the REITs properties, occupancy decreased to 86.2% from 87.8% quarter on quarter. The REIT manager explained the decrease in its local occupancy in its earnings release:

    “Lower occupancies were registered across most property segments due to the large supply of industrial space and uneven recovery in the manufacturing sector. The lower Singapore portfolio occupancy was partly due to the scheduled termination of leases at 7 Tai Seng Drive in preparation for upgrading works, with the exit of the last tenant expected to be in the fourth quarter of 2018.”

  7. As of 30 September 2018, the REIT’s weighted average lease expiry (by gross rental income) came in at 3.7 years with only 7.7% of the leases expiring in FY18/19.
  8. Mapletree Industrial Trust’s net asset value (NAV) remained stable compared to the last quarter coming in at S$1.48.

The Road Ahead

On the investment front, Mapletree Industrial Trust reported that Mapletree Sunview, a build-to-suit data centre development, was completed on 13 July 2018 and is now fully leased for an initial term of more than 10 years.

Additionally, the REIT provided a quick update on its outlook:

“The leasing interest for the recently completed asset enhancement initiative at 30A Kallang Place remains positive and have attracted high-quality tenants from various sectors such as information communications and technology and production engineering. To-date, we have secured a commitment for 75.0% of the total net lettable area with most leases to commence progressively by the first quarter of 2019. Together with the long-term lease of Mapletree Sunview 1, these will provide stability and growth to the portfolio.”

Units of Mapletree Industrial closed at S$1.95 yesterday, sporting a price-to-book ratio of around 1.32 and a yield of 5.15%.

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The Motley Fool Singapore contributor Esjay contributed to this article. Esjay does not own any of the shares mentioned.

The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. Motley Fool Singapore has recommended shares of Mapletree Industrial Trust. Motley Fool Singapore writer Chin Hui Leong does not own any of the shares mentioned.