After market hours yesterday (25 January 2022), Mapletree Industrial Trust (SGX:ME8U), a blue-chip industrial REIT with its portfolio comprised 86 properties in Singapore and 57 properties in North America (including 13 data centres held through the joint venture with Mapletree Investments Pte Ltd) released its financial results for the third quarter, and for the first nine months of the financial year 2021/22 ended 31 December 2021 (the REIT has a financial year ending every 31 March.)

Despite not mandated to report its full financial results on a quarterly basis, the REIT has continued to do so (which is something I like as a retail investor.) Not only that, it is also one of the few Singapore-listed REITs (or S-REITs for short) that has continued to declare a distribution payout to its unitholders once every quarter (so for those who prefer to invest in companies that pays out a dividend on a quarterly basis, this REIT is one you can consider – but please do your own due diligence before you make any investment decisions.)

In the rest of this post, you’ll learn about the industrial REIT’s latest financial performance (both on a quarter-on-quarter, as well as on a year-on-year basis), its portfolio occupancy and debt profile (which I will be comparing the statistics reported for the current quarter under review against that reported in the previous quarter 3 months ago), along with its distribution payout to unitholders. On top of that, you’ll also find my personal thoughts about the REIT’s latest set of results.

Let’s begin…

Financial Performance (Q3 FY2020/21 vs. Q3 FY2021/22, and 9M FY2020/21 vs. 9M FY2021/22)

In this section where I review the REIT’s financial performance, you’ll first learn about its quarter-on-quarter (q-o-q) results, followed by its year-on-year (y-o-y) results:

Q3 FY2020/21 vs. Q3 FY2021/22:

Q3 FY2020/21Q3 FY2021/22% Variance
Gross Revenue
(S$’mil)		$123.7m$162.4m+31.3%
Property Operating
Expenses (S$’mil)		$24.8m$39.6m+60.0%
Net Property
Income (S$’mil)		$98.9m$122.7m+24.1%
Distributable
Income to
Unitholders (S$’mil)		$81.1m$89.5m+10.4%

On a q-o-q basis, the blue-chip industrial REIT’s latest quarter result was a desirable one (in my opinion) – the 31.3% and 24.1% growth in its gross revenue and net property income respectively can be attributed to revenue contribution from the New Portfolio acquired in July 2021, and the data centre at Richmond, Virginia acquired in Q4 FY2020/21, along with a lack of rented reliefs granted to eligible tenants in the same time period last year.

As a result of improvements made in its gross revenue and net property income, the REIT’s distributable income to unitholders saw a 10.4% increase compared to last year.

Finally, the 60.0% jump in its property operating expenses is due to expenses incurred by the newly acquired New Portfolio and data centre in Richmond, Virginia.

9M FY2020/21 vs. 9M FY2021/22:

9M FY2020/219M FY2021/22% Variance
Gross Revenue
(S$’mil)		$326.1m$446.0m+36.7%
Property Operating
Expenses (S$’mil)		$67.0m$98.2m+46.7%
Net Property
Income (S$’mil)		$259.2m$347.8m+34.2%
Distributable
Income to
Unitholders (S$’mil)		$224.5m$260.6m+16.1%

Comparing the REIT’s financial performances for the first 9 months of the current financial year against the same time period last year, again, I’m pleased to note the double-digit percentage growth recorded in its top- and bottom-line.

The 36.7% and 34.2% y-o-y improvement in its gross revenue and net property income respectively was largely due to the full period revenue contribution from the 14 data centres previously held under MRDCT, data centre at Richmond, Virginia, and revenue contribution from the New Portfolio, as well as the absence of rental rebates given out in the same time period last year. This resulted in the REIT’s distributable income to unitholders going up by 16.1% to S$260.6m (compared to $224.5m in the same time period last year.)

Finally, the 44.7% jump in its property operating expenses was due to expenses incurred by the 14 data centres previously held under MRDCT, the data centre at Richmond, Virginia, along with operating expenses from properties from the New Portfolio.

Portfolio Occupancy Profile (Q2 FY2021/22 vs. Q3 FY2021/22)

Compared to the previous quarter (i.e. the second quarter of FY2021/22 ended 30 September 2021), did Mapletree Industrial Trust’s portfolio occupancy profile for the current quarter under review (i.e. the third quarter of FY2021/22 ended 31 December 2021) performed better, worse, or remained more or less the same?

Let us find out in the table below:

Q2 FY2021/22Q3 FY2021/22
Portfolio Occupancy
(%)		93.7%93.6%
Portfolio WALE (by
Gross Rental Income
– years)		4.3 years4.2 years

My Observations: Looking at the portfolio occupancy and portfolio weighted average lease expiry (WALE) for the current quarter under review compared to the previous quarter, I personally felt that it has more or less remained stable.

In terms of lease expiry, only 1.4% of the leases will be up for renewal in the final quarter of the current financial year 2021/22, with another 16.0% of the leases up for renewal in the next financial year 2022/23.

Debt Profile (Q2 FY2021/22 vs. Q3 FY2021/22)

Just like how I have looked at the REIT’s portfolio occupancy profile in the previous section, I will also be reviewing its debt profile by comparing the stats reported for the current quarter under review compared against the previous quarter 3 months ago:

Q2 FY2021/22Q3 FY2021/22
Aggregate Leverage
(%)		39.6%39.9%
Interest Coverage
Ratio (times)		6.7x6.4x
Average Term to
Debt Maturity (years)		2.6 years3.5 years
Average Cost of
Debt (%)		2.4%2.3%

My Observations: Personally, I felt that the REIT’s debt profile, when compared against the previous quarter, have continued to remain stable as well.

No doubt the REIT’s aggregate leverage have inched closer towards the 40.0% mark, but as the REIT has maintained a interest coverage ratio of above 2.5x, its aggregate leverage limit from the calendar year 2022 onwards will be at 50.0% – meaning there still remains a debt headroom of about 10.0% for the REIT to embark on further yield-accretive acquisitions.

In terms of the REIT’s borrowings that will be maturing in the coming years ahead, I must say they are quite well-staggered – with 9.2% (or S$273.0m) of its borrowings maturing in the final quarter of the current financial year 2021/22, 13.0% (or S$341.3) of its borrowings maturing in FY2022/23, 9.6% of its borrowings maturing in FY2023/24, and the remaining 68.2% of its borrowings will be maturing in the financial year 2024/25 and beyond.

Distribution Payout to Unitholders

For the current quarter under review, the REIT’s management have declared a distribution of 3.49 cents/unit, a 6.4% improvement compared to the payout of 3.28 cents/unit declared in the same time period last year.

Also, the REIT will be resuming its dividend reinvestment plan (or DRP for short) scheme in that, you can choose to receive your distribution in units of the REIT instead of cash payment. More details on that will be provided by the REIT later – after it has gone ex-dividend on 03 February 2022.

If you like to receive your distribution in cash, then there’s no need for you to do anything (as cash payout is the default mode, and you’ll receive them on 15 March 2022.) However, if you like to receive your distribution in a form of units of the REIT, then you’d need to respond to a letter that you’d be receiving (via your letterbox at the address you’ve indicated in your CDP account if your units are held there; otherwise, you’ll receive a message from the brokerage platform if your units are held in a custodian account) to indicate your preference.

In case you’re wondering my choice, I’d be opting to receive my distributions in units of the REIT – reason being it’ll be very likely that the unit price offered to me will be much lower than my current average invested price (at $2.85), and I can use this opportunity to further bring down the average price of the REIT without actually forking out additional cash myself.

Closing Thoughts

As a unitholder, I’m happy to note of its q-o-q, as well as y-o-y improvements in its financial performance – contributed by the new acquisitions. Also, its portfolio occupancy and debt profile have more or less continued to remain stable, which is good to note as well.

With that, I have come to the end of my review of Mapletree Industrial Trust’s latest third quarter and 9-month results for the FY2021/22. As always, I do hope you’ve found the contents presented above useful, and do take note that all the opinions that you’ve read above are purely mine which I’m sharing for educational purposes only. Please do your own due diligence before you make any investment decisions.

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Disclaimer: At the time of review, I am a unitholder of Mapletree Industrial Trust.

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