On 29 October 2024, Mapletree Industrial Trust (“MIT”) have announced their half year results for FY2025. DPU for this quarter saw a decrease when compared to the previous quarter, attributed to an increase in borrowing costs. This might change over the next few quarters given that interest rates are currently forecasted to decrease, barring any policy changes with the US elections that happened this week. MIT also saw an increase in their occupancy rate, a good reversal trend.
Do note that MIT have completed an acquisition of a multi-storey mixed-use facility in Tokyo, Japan which comprises of data centre, back office, training facilities and an adjacent accommodation wing. This was completed on 29 October 2024 for JPY14.9 billion (approximately SGD133.6 million).
For investors who are considering to take the scripts, do note that the current traded share price of SGD2.27 per share is lower than the reinvestment price of SGD2.30 per share.
Website: Financial Statements And Related Announcement::Second Quarter And/Or Half Yearly Results
Photo source: https://fifthperson.com/2021-mapletree-industrial-trust-agm/
Financial Highlights
Distribution Per Unit (“DPU”)
| Metrics | Current | Previous |
|---|---|---|
| Distribution Per Unit | -1.7% | +1.2% |
With effect from November 2024, I will be using the quarter-on-quarter DPU changes as references for REITs that share their quarterly DPU changes. This is due to REITs are usually not as affected by seasonal changes.
DPU for the quarter ending 30 September 2024 decreased by 1.7% to SGD0.0337 per share compared to SGD0.0343 per share in the previous quarter. The decrease is mainly due to an increase in borrowing costs, causing the amount available for distribution to unitholders to decrease by 1.5%. This metric is Unfavorable. If comparing DPU for the first half of FY2025 with the same period in the previous financial year, DPU saw an increase by 1.3%.
Occupancy
| Metrics | Current | Previous |
|---|---|---|
| Occupancy | 92.9% | 91.9% |
Occupancy rate as of 30 September 2024 have improved to 92.9%. Disclosed by management that this was due to full quarter effect of the lease commencement of Vanderbilt University Medical Center at 402 Franklin Road, Brentwood. The metric shifted towards Neutral as it is above my benchmark of 92.5% for neutral rating but below my expected healthy occupancy rate of 95%.
Gearing ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing Ratio | 39.1% | 39.1% |
Gearing ratio remains unchanged at 39.1% as of 30 September 2024. Therefore, the metric remains Neutral, unchanged from previous quarter.
Interest coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest Coverage | 4.3x | 4.3x |
The adjusted interest coverage for the trailing 12 months remains unchanged at 4.3 times as of 30 September 2024. Therefore, this metric remains Favorable as the coverage ratio is above my preferred coverage of 3.0 times.
Debt maturity profile
| Metrics | Current | Previous |
|---|---|---|
| Debt Maturity Profile | 3.4 years | 3.6 years |
Weighted average term to maturity of their debt shortened to 3.4 years as of 30 September 2024. This metric remains Favorable as there is still sufficient time to refinance their debts as they fall due.
Price to Book Ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 1.32 | 1.30 |
The Price to Book (“P/B”) ratio currently stands at 1.32 This is computed using the closing share price of SGD2.27 on 8 November 2024 and the net asset value per share of SGD1.72 as of 30 September 2024. The P/B ratio is on a higher side compared to other REITs and investors will be paying a significant premium. The metric is Unfavorable.
As of 8 November 2024, the Market Capitalization is approximately SGD6,455 million.
Dividend
| Year | Yield | Total |
|---|---|---|
| 2024 | 5.96% | SGD 0.135 |
| 2023 | 5.92% | SGD 0.134 |
| 2022 | 6.09% | SGD 0.138 |
| 2021 | 5.90% | SGD 0.134 |
| 2020 | 5.37% | SGD 0.122 |
| 2019 | 5.32% | SGD 0.121 |
With the total payout of SGD0.135 per share for the calendar year 2024 and the closing share price of SGD2.27 as of 8 November 2024, this translates to a dividend yield of 5.96%. For my benchmark, a general reasonable yield would be around 5.00%. The dividend yield is Favorable.
Website: Reasonable Dividend Yield 2024Q4 – 5.00%
In the event that should the required dividend yield increase to 7.00% as a benchmark, based on the dividend of SGD0.135 there is potential for MIT to see its share price drop by 15.0% to SGD1.93.
| Yield | Share Price | Downside |
|---|---|---|
| Current (5.96%) | 2.27 | – |
| 6.00% | 2.25 | -0.9% |
| 7.00% | 1.93 | -15.0% |
Interest Rate Sensitivity
The Federal Reserve on 7 November 2024 have further slashed interest rate by a quarter point to a range of 4.50% to 4.75%. This is in line with earlier expectations for future rate cuts, which will benefit REITs in general.
Website: Federal Reserve cuts interest rates by a quarter point
MIT have provided the interest rate sensitivity analysis as below. Should the interest rate change by 1.0%, using distribution per quarter as a base, distribution is expected to change by 1.3%.
| Change in Interest Rates | Impact on amount available for distribution per quarter (SGD’000) | Impact on DPU (%) |
|---|---|---|
| 50 bps | $600 | 0.7% |
| 100 bps | $1,300 | 1.3% |
| 150 bps | $1,900 | 2.0% |
Other metrics
Tenant profile
MIT has an enlarged portfolio covering multiple trade sectors, with a well-diversified tenant profile of over 2,000 tenants and the top 10 customers as of 30 September 2024 accounted for 30.2% of MIT’s portfolio with no single tenant accounting for more than 6.0% during the period, providing income diversity to the portfolio.
Summary
| Metrics | Financials | Rating |
|---|---|---|
| Distribution Per Unit | -1.7% | Unfavorable |
| Occupancy | 92.9% | Neutral |
| Gearing Ratio | 39.1% | Neutral |
| Interest Coverage | 4.3x | Favorable |
| Debt Maturity Profile | 3.4 years | Favorable |
| Price to Book Ratio | 1.32 | Unfavorable |
| Overall | Neutral |
The overall metrics indicate that it remains Neutral to invest in MIT. MIT has shown to be relative stable relative to the other REITs. Given MIT’s stable track record, it should provide some ease to investors that the REIT will be able to ride out the uncertainties ahead.
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only.
Background
MIT is a real estate investment trust listed on the Main Board of Singapore Exchange. The principal activity of MIT and its subsidiaries (the “Group”) is to invest in income-producing real estate used primarily for industrial purposes in Singapore and as data centres worldwide beyond Singapore, as well as real estate-related assets, with the primary objective of achieving sustainable returns from rental income and long-term capital growth.
MIT’s property portfolio includes Data Centres (Singapore), Data Centres (North America), Hi-Tech Buildings, Business Park Buildings, Flatted Factories, Stack-up/Ramp-up Buildings and Light Industrial Buildings.
MIT’s property portfolio comprised properties in Singapore and North America (including data centres held through the joint venture with MIPL).
MIT’s distribution policy is to distribute at least 90.0% of its taxable income, comprising substantially rental income from the letting of its properties and related property services income after deduction of allowable expenses, as well as interest income from the periodic placement of cash surpluses in bank deposits.
MIT is managed by Mapletree Industrial Trust Management Ltd. and sponsored by Mapletree Investments Pte Ltd.
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Website: Mapletree Industrial Trust (SGX: ME8U): 2025 First Quarter Result
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