On 25 April 2024, Mapletree Industrial Trust (“MIT”) have announced their full year results for FY2024. There were revaluation losses to the investment properties as at their financial year end, though overall this seems to be well-managed as gearing ratio remains relatively unchanged. It does have an impact on the net assets of MIT however, which pushed up the price to book ratio. DPU have also seen an overall decrease for the financial year, mainly attributable to the enlarged unitholder base from the private placement.
Despite the above, MIT has remained relatively stable and there were no significant changes to the other metrics. This should provide investors with some assurance that they will be able to ride out any uncertainties.
Website: Financial Statements And Related Announcement::Full Yearly Results
Photo source: https://fifthperson.com/2021-mapletree-industrial-trust-agm/
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.
Key Metrics
Distribution Per Unit (“DPU”)
| Metrics | Current | Previous |
|---|---|---|
| Distribution Per Unit | -1.0% | -1.7% |
DPU for the full year ending 31 March 2024 decreased by 1.0% to SGD0.134 per share compared to SGD0.136 per share in the previous financial year. This was mainly due to an overall increase in number of units available from the private placement, as amount available for distribution to unitholders and distribution to unitholders saw an increase by 5.2% and 2.7% respectively. This metric is Unfavorable.
Occupancy
| Metrics | Current | Previous |
|---|---|---|
| Occupancy | 91.4% | 92.6% |
Occupancy rate as of 31 March 2024 have decreased to 91.4%. This metric is Unfavorable as it is below my expected healthy occupancy rate of 95%.
Gearing ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing Ratio | 38.7% | 38.6% |
Gearing ratio remains relatively unchanged at 38.7% as of 31 March 2024. This to me remains Neutral, unchanged from previous quarter.
Interest coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest Coverage | 4.3x | 4.2x |
The adjusted interest coverage for the trailing 12 months stands at 4.3 times as of 31 March 2024. This is Favorable in my opinion as the coverage ratio is above my preferred coverage of 3.0 times. They also have a larger margin of safety should interest rates increase, as the inflation data in April 2024 continues to suggest high inflation. This gives the Federal Reserve less incentive to lower interest rate after increasing the interest rates to a range between 5.25% and 5.50% on 26 July 2023.
Website: Wall Street pushes out rate-cut expectations, sees risk they don’t start until March 2025
MIT have provided the interest rate sensitivity analysis as below. Should the interest rate increase by another 1.0%, using distribution per quarter as a base, distribution is expected to decrease by 1.0%. Together with other cost pressures, DPU may be negatively affected moving forward and investors should keep a keen eye out for the interest coverage.
| Change in Interest Rates | Impact on amount available for distribution per quarter (SGD’000) | Impact on DPU (%) |
|---|---|---|
| + 50 bps | -$500 | -0.5% |
| + 100 bps | -$1,000 | -1.0% |
| + 150 bps | -$1,500 | -1.5% |
Debt maturity profile
| Metrics | Current | Previous |
|---|---|---|
| Debt Maturity Profile | 3.8 years | 3.4 years |
Weighted average term to maturity of their debt stands at 3.8 years as of 31 March 2024. This is Favorable and it allows them sufficient time to refinance their debts as they fall due.
Price to Book Ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 1.29 | 1.22 |
The Price to Book (“P/B”) ratio currently stands at 1.29. This is computed using the closing share price of SGD2.27 on 26 April 2024 and the net asset value per share of SGD1.76 as of 31 March 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.
Dividend yield
| Year | Yield | Total |
|---|---|---|
| 2024 | 2.96% | SGD 0.067 |
| 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 payout in the first half of the calendar year 2024, the total expected dividend payout for 2024 is likely to be similar to 2023. With the closing share price of SGD2.27 as of 26 April 2024, this translates to a dividend yield of 5.92%. For my benchmark, a general reasonable range would be around 5.50% to 6.50%. The dividend yield is thus Favorable.
Website: Reasonable Dividend Yield 2024Q2
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 31 March 2024 accounted for 29.1% 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 | -1.0% | Unfavorable |
| Occupancy | 91.4% | Unfavorable |
| Gearing Ratio | 38.7% | Neutral |
| Interest Coverage | 4.3x | Favorable |
| Debt Maturity Profile | 3.8 years | Favorable |
| Price to Book Ratio | 1.29 | Unfavorable |
| Overall | | Neutral |
Overall, the metrics indicate that it remains neutral to invest in MIT. There were no significant changes to the metric ratings this quarter, and MIT is relatively stable in the current uncertain environment. 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.
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