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Mapletree Industrial Trust’s Latest Earnings Update: Distribution Per Unit Grew 6.6%

Yesterday, Mapletree Industrial Trust (SGX: ME8U) released its third quarter earnings update for its fiscal year ending 31 March 2019 (FY18/19). The reporting period was for the quarter ended 31 December 2018. As a quick introduction, Mapletree Industrial Trust currently owns 86 industrial properties in Singapore and has an interest in 14 data centres in the US (through a 40:60 partnership with its sponsor, Mapletree Investments).

Here are nine things investors should know about Mapletree Industrial Trust’s latest results:

1. Gross revenue for the reporting quarter grew 2.3% year-on-year to S$93.6 million while net property income improved by 1.4% year-on-year to S$71.9 million.

2. The REIT’s distribution per unit (DPU) was up by a pleasing 6.6% year-on-year to 3.07 cents.

3. Based on Mapletree Industrial Trust’s annualised DPU of 12.11 cents (calculated using the year-to-date DPU of 9.08 cents) and its closing unit price of S$1.98 on 22 January 2019, the REIT has a distribution yield of 6.1%.

4. As of 31 December 2018, the REIT’s gearing stood at 34.7%, which is a safe distance from the regulatory gearing ceiling of 45%.

5. The REIT’s Singapore portfolio had an occupancy rate of 88.2% for the reporting quarter, up sequentially from 86.2% in the previous quarter, but down from 90.1% a year ago.

6. The overall weighted average lease expiry (by gross rental income) for the REIT’s portfolio was 3.7 years as of 31 December 2018. 23.1% of Mapletree Industrial Trust’s leases will expire by FY19/20, 42.9% will expire in the following two years, while the remaining will expire on or after FY22/23.

7. Mapletree Industrial Trust had over 2000 tenants as of 31 December 2018, and the top 10 tenants currently account for 26.3% of the REIT’s overall gross rental income.

8. Mapletree Industrial Trust received unitholders’ approval on 22 January 2019 for its proposed acquisition of 18 Tai Seng, a nine-storey mixed-use industrial development with industrial, office, and retail spaces.

9. Here are the comments from the REIT on its outlook:

“Business sentiment among local companies moderated significantly for the first quarter of 2019 amid elevated global trade tensions. The pace of global economic expansion is projected to ease, in part due to the impact of the ongoing trade tensions. The upcoming supply of competing industrial space is expected to moderate both the market rents and occupancy rates. The Manager remains focused on tenant retention to maintain a stable portfolio occupancy.

According to CBRE, the United States wholesale data centre market absorbed over 215 megawatts through the third quarter of 2018. The growth is attributed to the strong demand largely from hyperscale cloud providers as demand continues to outpace available supply. 2018 year-to-date recorded absorption for the United States primary markets was 80% of the 2017 record level and remains a bullish indicator into 2019.”

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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.