Mapletree Industrial Trust (“MIT”) has generated much chatter with their recent scrip dividends. A fundamentally strong stock, they have been relatively stable and providing decent dividends over the last few years.
While this is a post for the first quarter of 2023, I have included their full financial year 2022 results as well in areas which are applicable. Overall there are signs that they are in the right direction.
Background
Mapletree Industrial Trust (“MIT”) is a real estate investment trust (“REIT”) listed on the Main Board of Singapore Exchange. Its principal investment strategy is to invest in a diversified portfolio of income-producing real estate used primarily for industrial purposes in Singapore and income-producing real estate used primarily as data centres worldwide beyond Singapore, as well as real estate-related assets.
As at 30 June 2022, MIT’s total assets under management was SGD8.8 billion, which comprised 85 properties in Singapore and 56 properties in North America (including 13 data centres held through the joint venture with Mapletree Investments Pte Ltd).
MIT’s property portfolio includes:
- Data Centres
- Hi-Tech Buildings
- Business Park Buildings
- Flatted Factories
- Stack-up/Ramp-up Buildings
- Light Industrial Buildings
MIT is managed by Mapletree Industrial Trust Management Ltd. and sponsored by Mapletree Investments Pte Ltd.
Key Metrics
Distribution Per Unit (“DPU”)
Based on the announcement on 25 July 2022, DPU increased by 4.2% and revenue have increased by 31.0% as compared to the first quarter of 2022. Their 2022 results also show that DPU for the full year grew by 10% to SGD0.1380 per share from SGD0.1255 per share in the previous financial year. This metric is Favorable as MIT has been able to grow their DPU via accretive acquisitions.
Occupancy
Occupancy rate as at 30 June 2022 stands at a total of 95.3% as compared to 94.0% at 31 March 2022. This is contributed by an overall improvement in occupancy for all their asset. This metric is Favorable as it is above my expected healthy occupancy rate of 95%.
Gearing ratio
Gearing ratio stands at 38.4% as at 31 March 2022 and 30 June 2022 . This to me is Favorable, as it is still a distance away from the MAS limit of 50% and also provides adequate headroom for MIT to leverage on debt should there be an accretive acquisition in the short term.
Interest coverage
The interest coverage stands at 6.0 times as at 30 June 2022 respectively. This is Favorable in my opinion but similar to the other REITs, there is a need to keep an eye out for increasing interest rates with recent fears of inflation resulted in the United States (“US”) playing with the idea of increasing interest rates to combat inflation. Something that investors should take note of.
Debt maturity profile
Weighted average term to maturity of their debt stands at 3.7 years as at 30 June 2022. This is Favorable and it allows them sufficient time to refinance their debts as they fall due.
Price to Book Ratio
The Price to Book (“P/B”) ratio currently stands at 1.40. This is computed using the closing share price of SGD2.63 on 23 August 2022 and the net asset value per share of SGD1.88 as at 30 June 2022. Although it is a well managed asset, its P/B ratio is on a high side. The metric is Neutral.
Dividend yield
At 23 August 2022, with a closing share price of SGD2.63 and dividend payout of SGD0.134 for the full calendar year 2021, this translates to a dividend yield of 5.10%, an increase from the previous calendar year. For my REIT’s benchmark, a general reasonable range would be around an average of 4.5%. The dividend yield is thus Favorable.
Other metrics
Tenant profile
MIT has an enlarged portfolio covering multiple trade sectors. The high quality and diverse tenant base provides resilience to the MIT portfolio across challenging events, as evidenced during the ongoing COVID-19 pandemic. The top-10 tenants accounted for only 29.8% of MIT’s portfolio with no single tenant accounting for more than 6.1% during the period, providing income diversity to the portfolio.
Summary
Overall, the metrics indicate that it is favorable to invest in MIT. The recent market conditions present opportunities for entry as the share price continues to face downward pressure. This is a good stock that is poised for growth and there is still demand for industrial properties which is Covid-19 proof.
The above are a brief summary and thoughts of MIT. Admittedly still a work in progress as I refined on more things to add. For some more detail analysis, can check out the article written by REIT-TIREMENT.
Website: Mapletree Industrial Trust Review @ 2 August 2022
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