Mapletree Industrial Trust (SGX: ME8U), or MIT, is one of the biggest industrial real estate investment trusts (REITs) listed in Singapore. It has 87 industrial properties in Singapore and 14 data centres in the US (through its 40% joint venture with parent and sponsor Mapletree Investments Pte Ltd).
In this article, I’ll explore three good reasons for investors to like the REIT now.
Solid track record
One of the very first thing to like about MIT is its solid historical financial performance. Since its IPO, MIT has grown its gross revenue from S$ 246.4 million in FY11/12 to S$376.1 million in FY18/19. Similarly, its distributable income grew from S$131.7 million to S$231.8 million during the period. Consequently, distribution per unit (DPU) grew from 8.41 cents in FY11/12 to 12.16 cents in FY18/19.
I don’t know about you but such numbers are definitely appealing to me as an investor. But can MIT sustain its historical performance going forward? Let’s look at our next point below.
Positive quarterly performance
Not only did MIT has a strong track record but it’s also continued to deliver positive performance lately. Let’s look at some numbers.
For the quarter ended 31 March 2019, MIT’s gross revenue grew 5.6% year-on-year to S$98.8 million while net property income improved by 5.5% year-on-year to S$75.9 million. Similarly, the REIT’s distribution per unit (DPU) was up by 0.3% year-on-year to 3.08 cents.
The improvement was primarily due to income contributions from development projects, as well as contributions from new properties. In short, MIT sustained its strong performance in the latest quarter.
Last but not least, I want to emphasise another important point here about MIT, which is its low gearing.
As of 31 March 2019, the REIT’s gearing stood at 33.8%, which is a safe distance from the regulatory ceiling of 45%. There are many benefits of having a low gearing. For one, its financial risk is lower. What’s more, such low gearing means that MIT has ample room to leverage its balance sheet to acquire new assets without the need for shareholder dilution.
Overall, investors will be able to sleep better, knowing that the REIT is financially sound while positively positioned to grow.
In sum, I believe MIT is a solid REIT for investors to explore further because of its impressive financial track record, strong execution, and low gearing.
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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 recommended shares of Mapletree Industrial Trust.