Besides Mapletree Logistics Trust (you can find my summary of its latest annual report here), Mapletree Industrial Trust (SGX:ME8U) is the second Mapletree-listed REIT to also publish its latest annual report for the financial year 2020/21 ended 31 March 2021 yesterday morning (21 June 2021), along with details of its upcoming annual general meeting (AGM).
Being a unitholder of the industrial REIT, I have studied the report to receive the latest updates, and in this post, you will find notes I have taken (which contains key pointers to take note of), together with details of its upcoming AGM (I have also signed up to attend, along with submitted a question that I have for the REIT’s management – more on it below), as well as my personal thoughts about the REIT to share…
Letter to Unitholders by Chairman Mr Wong Meng Meng, and CEO Mr Tham Kuo Wei
Provision of Support in Light of the Ongoing Covid-19 Pandemic:
- Rental reliefs amounting to about S$12.7m was provided to affected tenants in FY2020/21, which comprised of the REIT’s Covid-19 Assistance & Relief Programme, as well as the mandated rental reliefs under the Covid-19 (Temporary Measures) Act 2020.
- The above was on top of the additional measures such as using cash security deposits for rents, as well as restructuring of leases to tenants on a case-by-case basis.
- For the community at large, the REIT raised S$7,350 for their employees through their ‘Pack a Bag’ corporate social responsibility initiative for 71 beneficiaries from Children’s Wishing Well, and Thye Hua Kwan Family Service @ Tanjong Pagar. The REIT’s sponsor, Mapletree Investments Pte Ltd, donated over 2 million disposable medical masks to various frontline agencies, helping to alleviate the mask shortage situation in countries it operates in.
- Gross revenue increased by 10.2% compared to last year to S$447.2m (FY2019/20: S$409.5m), and net property income went up by 10.4% in the same time period to S$351.0m (FY2019/20: S$318.1m) – the improvements can be attributed to the contribution from the consolidation of revenue from the 14 data centres in the United States of America upon the acquisition of the remaining 60.0% interest from the Sponsor, partially offset by rental reliefs and revenue loss from the redevelopment of the Kolam Ayer 2 cluster.
- As a result of a higher net property income and distributions declared by joint ventures, the REIT’s distributable income to unitholders saw a 11.3% year-on-year (y-o-y) gain to S$295.3m (FY2019/20: S$265.3m), with its distribution per unit up by 2.5% to 12.55 cents/unit (FY2019/20: 12.24 cents/unit).
- Debt profile-wise, as at 31 March 2021, its aggregate leverage is at 40.3%, with its all-in funding cost at 2.8%, and there are more than S$600m of committed facilities available for drawdown.
- Average overall portfolio occupancy rate rose to 92.6% in FY2020/21 (FY2019/20: 90.9%), primarily driven by an improvement in its Singapore portfolio occupancy rate.
Acquisitions in FY2020/21:
- In June 2020, the REIT announced the acquisition of the remaining 60.0% interest in 14 data centres in the United States of America (which were 96.7% leased out to 15 established tenants, including Fortune 500 companies, as well as NYSE- and NASDAQ-listed companies.)
- In March 2021, the REIT announced the acquisition of a data centre and office located in 8011 Villa Park Drive, Richmond, Virginia, in the United States of America. It is fully leased to a multinational company with a strong credit standing on a triple net basis for more than 5 years.
- The Covid-19 pandemic will undoubtedly change the way people live and play for the foreseeable future.
- The REIT have been steadily reshaping and building a resilient portfolio by prospecting tenants for growth trade sectors, and extending their foothold in the fast growing data centre sector.
- Finally, the right of first refusal (ROFR) from the Sponsor for the acquisition of its 50.0% interest in Mapletree Rosewood Data Centre Trust will be a significant pipeline for growth.
Portfolio Occupancy Profile as at 31 March 2021
Top 10 Tenants by Gross Rental Income:
Apart from HP Singapore (Private) Limited, and AT&T Inc., no one single tenant contributed more than 3.8% towards the REIT’s overall gross rental income in FY2020/21.
Also, among its top 10 tenants, 8 of them are tenants for the REIT’s data centre properties (marked by the symbol ‘Data Centre’ beside the tenant’s name in the table below), while the remaining 2 are for the REIT’s hi-tech buildings (denoted by the symbol ‘Hi-Tech’ beside the tenant’s name in the table below):
|1.||HP Singapore (Private) Limited|
|3.||Equinix Singapore Pte Ltd|
|4.||Global Social Media Company|
|5.||The Bank of America Corporation|
|6.||Global Colocation Provider|
|7.||STT Tai Seng Pte Ltd|
|8.||Fortune 25 Investment Grade-Rated|
Company (Data Centre)
|9.||Sivantos Pte Ltd|
|10.||The Vanguard Group|
Lease Expiry Profile:
Personally, I felt that the REIT’s lease expiry over the next couple of financial years ahead is quite well-separated, and you can find them below:
FY2024/25 and Beyond: 42.3%
Details of Mapletree Industrial Trust’s Upcoming AGM
Due to the current safe distancing measures in place, Mapletree Industrial Trust will be holding its upcoming 11th AGM virtually on Wednesday, 14 July 2021, at 2.30pm.
Unitholders can sign up to attend the online meeting before Sunday, 11 July 2021, at 2.30pm, along with submitting any questions you may have for the REIT’s management here.
As mentioned earlier in this post, I have already signed up to attend the meeting as a unitholder, and just like all other AGMs I have attended, I will be posting a summary of the industrial REIT’s AGM in due course.
Along with my registration, I have also submitted the following question:
“From the REIT’s Q4 and full-year results for 2020/21, I understand that the aggregate leverage recorded as at 31 March 2021 was at 40.3%. At this level, it is inching closer to the regulatory level of 50.0%. That said, I’d like to seek the REIT management’s inputs on whether there are any ideal aggregate leverage ratio the REIT is looking to maintain. Also, are there any further plans by the REIT’s management to bring down this ratio?”
As I have mentioned when I reviewed the blue-chip REIT’s fourth quarter and full-year results for FY2020/21 when it was released back in May (you can check out the post here), I am happy to note the REIT’s y-o-y improvements in its financial performance, despite the challenging environment it had to navigate as a result of the ongoing Covid-19 pandemic.
Also, just like I have mentioned in my review of the REIT’s fourth quarter and full-year results back in May, I have also highlighted my concerns about its high aggregate leverage, which is inching towards the regulatory level of 50.0%, to which I have submitted a question to seek the REIT management’s clarification.
With that, I have come to the end of my review of Mapletree Industrial Trust’s latest annual report. Hope you find my summary useful, and here’s wishing you a great day ahead!
Disclaimer: At the time of writing, I am a unitholder of Mapletree Industrial Trust.
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