Last Thursday (29 April 2021) evening, the final Mapletree REIT in Mapletree Industrial Trust (SGX:ME8U) published its latest results for the fourth quarter, as well as for the full-year ended 31 March 2021 (i.e. FY2020/21.)
As a unitholder of the blue-chip industrial REIT, I have studied through its latest set of results and in my post today (apologies for the delay as I was busy drafting the summaries of 4 AGMs I have attended last Thursday and Friday), you will find my review of the REIT’s latest set of financial results, debt and portfolio occupancy profile, along with its distribution payouts (the REIT is one of the few that continue to declare a distribution payout to its unitholders on a quarterly basis), as well as my thoughts to share.
Let’s begin…
Financial Results (Q4 FY2019/20 vs. Q4 FY2020/21, and FY2019/20 vs. FY2020/21)
Q4 FY2019/20 vs. Q4 FY2020/21:
| Q4 FY2019/20 | Q4 FY2020/21 | % Variation | |
| Gross Revenue (S$’mil) | $101.8m | $121.1m | +18.9% |
| Property Operating Expenses (S$’mil) | $23.5m | $29.3m | +24.2% |
| Net Property Income (S$’mil) | $78.3m | $91.8m | +17.3% |
| Distributable Income to Unitholders (S$’mil) | $69.2m | $70.7m | +2.3% |
On a quarter-on-quarter (q-o-q) basis, the REIT’s latest set of results have further improved – the 18.9% growth in its gross revenue can be attributed to the consolidation of revenue from the 14 data centres in the United States of America previously held under MRDCT. However, this was partially offset by rental reliefs granted to tenants under the Covid-19 (Temporary Measures) Act 2020, along with the lack of revenue from Kolam Ayer 2 due to it currently undergoing re-development into a high-tech industrial precinct.
The increase in property operating expenses was due to the additional operating expenses incurred from the consolidation of data centres previously held under MRDCT, along with higher property maintenance expenses.
Finally, the 2.3% increase in the REIT’s distributable income to unitholders was mainly due to the higher net property income, partially offset by higher borrowing costs, manager’s management fees (due to a better portfolio performance, and an increase in the value of assets under management), and lower distribution declared by joint ventures.
FY2019/20 vs. FY2020/21:
| FY2019/20 | FY2020/21 | % Variation | |
| Gross Revenue (S$’mil) | $405.9m | $447.2m | +10.2% |
| Property Operating Expenses (S$’mil) | $87.8m | $96.2m | +9.6% |
| Net Property Income (S$’mil) | $318.1m | $351.0m | +10.4% |
| Distributable Income to Unitholders (S$’mil) | $265.3m | $295.3m | +11.3% |
On a year-on-year (y-o-y) basis, it is not surprising to find the REIT reporting a better set of results (as its results have reported improvements between the second and fourth quarters.)
The 10.2% improvement in its gross revenue was due to the consolidation of revenue from the 14 data centres in the United States of America previously held under MRDCT, and the full-year income contribution from 7 Tai Seng Drive, partly offset by rental reliefs granted to eligible tenants, along with the revenue loss as a result of the re-development of Kolam Ayer 2.
Property operating expenses went up by 9.6% due to the additional operating expenses incurred from the consolidation of data centres previously held under MRDCT, and higher property tax, partially offset by lower marketing commission, property maintenance expenses and utilities.
Finally, its distributable income to unitholders improved by 11.3%, which can be attributed to higher property income, as well as distributions declared by joint ventures, offset by higher borrowing costs and manager’s management fees.
Debt Profile (Q3 FY2020/21 vs. Q4 FY2020/21, and FY2019/20 vs. FY2020/21)
Moving on, let us take a look at the REIT’s debt profile recorded as at 30 March 2021, where I will first be comparing against its debt profile recorded in the previous quarter three months ago (i.e. Q3 FY2020/21), and against its debt profile recorded in the previous financial year (i.e. FY2019/20) to find out if it has improved, remained consistent, or deteriorated:
Q3 FY2020/21 vs. Q4 FY2020/21:
| Q3 FY2020/21 | Q4 FY2020/21 | |
| Aggregate Leverage (%) | 37.3% | 40.3% |
| Interest Coverage Ratio (times) | 6.4x | 6.0x |
| Average Term to Debt Maturity (years) | 3.2 years | 3.6 years |
| Average Cost of Debt (%) | 2.9% | 2.8% |
My Observations: Three months on, I would say that there are both good and not so good points to note.
First, the good points – its average cost of debt have dipped slightly, along with its average term to debt maturity have also improved. On the other hand, its aggregate leverage have gone up by 3.0 percentage point (pp) to 40.3% – which is just slightly under 10.0% of debt headroom to go before the regulatory limit of 50.0% is reached; also, its interest coverage ratio have decreased slightly to 6.0x.
FY2019/20 vs. FY2020/21:
| FY2019/20 | FY2020/21 | |
| Aggregate Leverage (%) | 37.6% | 40.3% |
| Interest Coverage Ratio (times) | 7.7x | 6.0x |
| Average Term to Debt Maturity (years) | 4.7 years | 3.6 years |
| Average Cost of Debt (%) | 2.9% | 2.8% |
My Observations: Compared to one year ago, the REIT’s debt profile have weakened slightly – due to its higher aggregate leverage, lower interest coverage ratio, as well as a shorter term to debt maturity.
In the financial year 2021/22 ahead, 16.4% (or S$368.0m) of its borrowings will mature. However, there remains more than S$600m of committed facilities available.
Portfolio Occupancy Profile (Q3 FY2020/21 vs. Q4 FY2020/21, and FY2019/20 vs. FY2020/21)
Similar to how I have looked at the REIT’s debt profile in the previous section, I will be comparing the REIT’s portfolio occupancy profile recorded as at 31 March 2021 against that recorded in the previous quarter (i.e. Q3 FY2020/21 ended 31 December 2020), as well as that recorded a year ago (i.e. FY2019/20 ended 31 March 2020):
Q3 FY2020/21 vs. Q4 FY2020/21:
| Q3 FY2019/20 | Q4 FY2020/21 | |
| Portfolio Occupancy (%) | 93.1% | 93.7% |
| Portfolio WALE (by Gross Rental Income – years) | 4.1 years | 4.0 years |
My Observations: The slight improvements in its portfolio occupancy rate can be attributed to improvements in the occupancy rate in its hi-tech (up to 98.5% from 98.3%), flatted factories (up to 89.9% from 89.7%), and stack-up/ramp-up building (up to 96.7% from 92.9%.)
FY2019/20 vs. FY2020/21:
| FY2019/20 | FY2020/21 | |
| Portfolio Occupancy (%) | 91.5% | 93.7% |
| Portfolio WALE (by Gross Rental Income – years) | 4.2 years | 4.0 years |
My Observations: On a y-o-y basis, the REIT’s portfolio occupancy profile saw a 2.2pp improvement to 93.7%, which can be attributed to improvements in occupancy rates of its flatted factories (up to 89.9% from 86.2%), stack-up/ramp-up buildings (up to 96.7% from 94.0%), and also its light industrial buildings (up to 80.4% from 80.0%.)
14.8% of its leases will be expiring in the financial year 2021/22 ahead.
Distribution Per Unit
For the quarter under review, the REIT have declared a distribution per unit payout of 3.30 cents – an improvement of 15.8% from its payout of 2.85 cents recorded in the same time period last year.
If you are a unitholder of the REIT, the following are some of the important dates relating to its upcoming payout to take note of:
Ex-Date: 06 May 2021
Record Date: 07 May 2021
Payout Date: 08 June 2021
Finally, on a full-year basis, the REIT’s distribution payouts edged up by 2.5% to 12.55 cents/unit (FY2019/20: 12.24 cents/unit.)
Closing Thoughts
Personally, I must say that on the whole, the REIT’s latest set of results was a resilient one. What makes it even more impressive is that its financial results continued to improved even through the worst of the pandemic last year (in the calendar year 2020.)
The only thing, if I may have a bit of concerns about, is in its debt profile, where, at 40.3%, is inching towards the regulatory limit of 50.0%. I will be submitting a question during the REIT’s upcoming AGM to seek the management’s inputs on its ideal aggregate leverage level they are looking to maintain, along with any plans they may have in the year ahead to bring down this particular statistic.
Related Documents
Disclaimer: At the time of writing, I am a unitholder of Mapletree Industrial Trust.
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