Mapletree Industrial Trust (SGX:ME8U) is the final Mapletree REIT to release its updates for the third quarter, as well as for the first 9 months of FY2020/21 ended 31 December 2020 last Friday (29 January 2021) after trading hours.
As I am a unitholder of all 4 Mapletree REITs, I have done a review of their latest Q3 and 9M FY2020/21 results in separate posts and you can read about them below (in case you’ve missed it):
In today’s post, you will read about my review of the industrial REIT’s latest financial performance, portfolio occupancy and debt profile, as well as its distribution payout to unitholders, along with my thoughts about its latest set of update.
Let’s begin…
Financial Performance (Q3 FY2019/20 vs. Q3 FY2020/21, and 9M FY2019/20 vs. 9M FY2020/21)
In this section, let us take a look at the REIT’s results both on a quarter-on-quarter (q-o-q) as well as on a year-on-year (y-o-y) basis:
Q3 FY2019/20 vs. Q3 FY2020/21:
| Q3 FY2019/20 | Q3 FY2020/21 | % Variance | |
| Gross Revenue (S$’mil) | $102.6m | $123.7m | +20.5% |
| Property Operating Expenses (S$’mil) | $20.7m | $24.8m | +19.6% |
| Net Property Income (S$’mil) | $81.9m | $98.9m | +20.8% |
| Distributable Income to Unitholders (S$’mil) | $69.4m | $81.1m | +16.8% |
On a q-o-q basis, it was a set of improved results for the industrial REIT – the 20.5% increase in its gross revenue was due to the consolidation of the revenue from the 14 data centres in the United States of America previously held by Mapletree Rosewood Data Centre.
However, property operating expenses went up by 19.6% on a q-o-q basis due to property taxes as well as utilites.
Finally, the REIT’s distributable income to unitholders went up by 16.8% q-o-q due to higher net property income (which grew by 20.8% in the same time period), along with a higher distribution by Mapletree Rosewood Data Centre.
9M FY2019/20 vs. 9M FY2020/21:
| 9M FY2019/20 | 9M FY2020/21 | % Variance | |
| Gross Revenue (S$’mil) | $304.1m | $326.1m | +7.3% |
| Property Operating Expenses (S$’mil) | $64.2m | $67.0m | +4.2% |
| Net Property Income (S$’mil) | $239.8m | $259.2m | +8.1% |
| Distributable Income to Unitholders (S$’mil) | $196.2m | $224.5m | +14.4% |
Looking at the REIT’s financial results on a y-o-y basis, it is another improved one – the 7.3% y-o-y growth in its gross revenue can be attributed to the consolidation of revenue of the 14 data centres from the United States of America previously held under Mapletree Rosewood Data Centre, as well as a new income stream from 7 Tai Seng Drive.
Property operating expenses went up by 4.2% in the same time period due to additional operating expenses from the consolidation of the 14 data centres, along with a higher property tax.
Finally, the REIT’s distributable income to unitholders grew by 14.4% y-o-y due to higher net property income, as well as distributions declared by joint ventures.
My Thoughts: In my opinion, it is a set of good results reported by the blue-chip REIT, both on a q-o-q, as well as on a y-o-y basis.
Property Operating Profile (Q2 FY2020/21 vs. Q3 FY2020/21)
Next, let us take a look at the REIT’s portfolio occupancy profile for the current quarter under review (i.e. Q3 FY2020/21 ended 31 December 2020), where I will be comparing against the previous quarter (i.e. Q2 FY2020/21 ended 30 September 2020) to find out how it has performed 3 months on:
| Q2 FY2020/21 | Q3 FY2020/21 | |
| Portfolio Occupancy (%) | 92.3% | 93.1% |
| Portfolio WALE (by Gross Rental Income – in Years) | 4.2 years | 4.1 years |
My Thoughts: It is good to note that the industrial REIT’s overall portfolio occupancy have improved by 0.8 percentage points to 93.1% three months on – this is due to improvements in the occupancy rate in its flatted factories (up from 88.1% to 89.7%), high-tech buildings (up from 98.2% to 98.3%), as well as its light industrial buildings (up from 80.0% to 80.4%.)
In terms of lease expiries, in the final quarter of the financial year 2020/21, 2.6% of the leases are due for renewal.
Debt Profile (Q2 FY2020/21 vs. Q3 FY2020/21)
Apart from its financial figures and portfolio occupancy profile, the next thing I look at when I study a REIT’s results is its debt profile (to make sure that it does not take on too much borrowings.)
Just like its portfolio occupancy profile, I will be comparing the REIT’s debt profile for the current quarter under review (i.e. Q3 FY2020/21 ended 31 December 2020) against that recorded in the previous quarter 3 months ago (i.e. Q2 FY2020/21 ended 30 September 2020) to find out if it has improved or deteriorated:
| Q2 FY2020/21 | Q3 FY2020/21 | |
| Aggregate Leverage (%) | 38.1% | 37.3% |
| Interest Coverage Ratio (times) | 7.0x | 6.4x |
| Average Term to Debt Maturity (years) | 3.2 years | 3.2 years |
| Average Cost of Debt (%) | 2.7% | 2.9% |
My Thoughts: What I like about the REIT’s latest set of debt profile is that its aggregate leverage have come down by 0.8 percentage points to 37.3% – at this level, there remains plenty of debt headroom for the REIT to embark on more acquisition activities (as an when an opportunity to do so arises) before it reaches the regulatory limit of 50.0%.
Another point to note is the REIT’s interest coverage ratio – while it has come down slightly (compared to 3 months ago), but it is still at a safe range in my opinion (personally, I would consider any interest coverage ratio above 5.0x ideal.)
For the remaining quarter of the financial year 2020/21, there are no more debt expiring.
On the whole, I feel that the REIT’s latest debt profile (as at 31 December 2020) is a resilient one.
Distribution Per Unit (Q3 FY2019/20 vs. Q3 FY2020/21)
Finally, let us have a look at the REIT’s distribution per unit for its unitholders for the current quarter under review (i.e. Q3 FY2020/21) compared against the distributions declared for the same time period last year (i.e. Q3 FY2019/20) in the table below:
| Q3 FY2019/20 | Q3 FY2020/21 | % Variation | |
| Distribution Per Unit (S$’cents) | 3.16 cents | 3.28 cents | +3.8% |
If you are a unitholder of the REIT, you may want to take note of the following dates:
Ex-dividend: 05 February 2021
Record Date: 08 February 2021
Payout Date: 08 March 2021
In Conclusion
As a unitholder of the blue-chip industrial REIT, I am very happy to see a strong set of results reported by the REIT – from an improved set of financial results (both on a q-o-q as well as on a y-o-y basis), and also its portfolio occupancy profile. Its debt profile is also a very resilient one (where at 37.3%, it is still a safe distance away from the regulatory limit of 50.0%.)
Additionally, its distribution payout to unitholders declared is also a higher one compared to the same time period last year, which is good to note.
With that, I have come to the end of my review of Mapletree Industrial Trust’s latest results update. Please note that everything you have just read about above is purely for educational purposes only, and they do not represent any buy or sell calls for the REIT’s units.
Related Documents
Disclaimer: At the time of writing, I am a unitholder of Mapletree Industrial Trust.
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