Following the end of its financial year on 31 March 2022, Mapletree Industrial Trust (SGX:ME8U) made available its results for the fourth quarter, as well as for the full-year after market hours yesterday (26 April 2022.)

For those who are unfamiliar with the REIT, it is a constituent of Singapore’s benchmark Straits Times Index (STI), and at the time of writing of this post, its portfolio comprises a total of 86 industrial properties in Singapore, and 57 properties in North America (including 13 data centres it holds through a joint venture with Mapletree Investment Pte. Ltd.) Another thing to note about the REIT is that, it is one of the few that continues to report its full financial statement on a quarterly basis (something I like as an investor, as it allows me to get more regularly updates on how it performs financially and better evaluate whether or not the REIT continues to remain fundamentally sound), as well as one that continues to pay out its unitholders on a quarterly basis.

In this post, you’ll find my review (and thoughts) about the blue-chip REIT’s latest set of financial performance, portfolio occupancy and debt profile, as well as its distribution payout to unitholders.

Let’s begin:

Financial Performance (Q4 FY2020/21 vs. Q4 FY2021/22, and FY2020/21 vs. FY2021/22)

In this section, we’ll be taking a look at the REIT’s financial performance first on a quarter-on-quarter (q-o-q) basis (i.e. Q4 FY2020/21 vs. Q4 FY2021/22), and then on a year-on-year (y-o-y) basis (i.e. FY2020/21 vs. FY2021/22), as follows:

Q4 FY2020/21 vs. Q4 FY2021/22:

Q4 FY2020/21Q4 FY2021/22% Variance
Gross Revenue
(S$’mil)
$121.1m$164.1m+35.5%
Property Operating
Expenses (S$’mil)
$29.3m$39.9m+36.3%
Net Property
Income (S$’mil)
$91.8m$124.2m+35.3%
Distributable Income
to Unitholders
(S$’mil)
$70.7m$90.3m+27.7%

The REIT’s results for the fourth quarter of FY2021/22, compared against the same time period last year, was in my opinion a very resilient one.

The growth in its gross revenue and net property income was largely due to revenue contribution from the New Portfolio (comprising 29 data centres located in the United States) acquired in July 2021, and full quarter revenue from the data centre at Richmond, Virginia (in the United States) acquired in Q4 FY2020/21.

As a result of expenses incurred by the newly acquired properties (from the New Portfolio, as well as the data centre in Richmond, Virginia), its property operating expenses climbed 36.3% compared to the same time period last year.

FY2020/21 vs. FY2021/22:

FY2020/21FY2021/22% Variance
Gross Revenue
(S$’mil)
$447.2m$610.1m+36.4%
Property Operating
Expenses (S$’mil)
$96.2m$138.1m+43.5%
Net Property
Income (S$’mil)
$351.0m$472.0m+34.5%
Distributable Income
to Unitholders
(S$’mil)
$295.3m$350.9m+18.8%

On a full-year basis, in my opinion, the blue-chip REIT’s financial results is a strong one – where its gross revenue and net property income both saw 30+% improvements, largely due to revenue contribution from the New Portfolio acquired in July 2021, full year contribution from the 14 data centres previously held under MRDCT, along with data centre at Richmond, Virginia acquired in March 2021.

Along with the inclusion of the new properties into its portfolio, its property operating expenses also saw a 43.5% y-o-y increase (due to expenses incurred by these new additions.)

Portfolio Occupancy Profile (Q3 FY2021/22 vs. Q4 FY2021/22)

When it comes to reviewing a REIT’s portfolio occupancy profile, I will always compare the statistics reported for the current quarter under review, against that reported in the previous quarter 3 months ago to find out whether or not it has continued to remain resilient, or it is showing signs of weakening.

The following table is my comparison of the REIT’s portfolio occupancy profile for Q4 FY2021/22 (ended 31 March 2022) against that reported for Q3 FY2021/22 (ended 31 December 2022):

Q3 FY2021/22Q4 FY2021/22
Portfolio Occupancy
(%)
93.6%94.0%
Portfolio WALE (by
Gross Rental Income – years)
4.2 years4.1 years

My Observations: My personal take is that the REIT’s portfolio occupancy profile continues to remain very resilient – the 0.4 percentage point (pp) increase in its portfolio occupancy is contributed by an improvement in occupancy rates in its business park buildings (up from 83.0% in Q3 FY2021/22 to 83.3% in Q4 FY2021/22), flatted factories (up from 92.0% in Q3 FY2021/22 to 93.6% in Q4 FY2021/22.)

In terms of its portfolio lease expiry profile, its also well-spread out over the next couple of years – with 14.2% of the leases expiring in the coming FY2022/23 ahead, 21.5% in FY2023/24, 13.2% in FY2024/25, and the remaining 51.1% of the leases expiring only in FY2025/26 and beyond.

Finally, as far as lease renewals are concerned, it has improved for its hi-tech buildings, flatted factories, and also for its stack-up/ramp-up buildings. Only the lease renewals for its business park buildings edging down slightly – which in my opinion is good to note.

Debt Profile (Q3 FY2021/22 vs. Q4 FY2021/22)

Similar to how I have reviewed its portfolio occupancy profile in the previous section, I will also be reviewing the REIT’s debt profile by taking the statistics reported for the current quarter under review, and compare them against the previous quarter, and you can find them in the table below:

Q3 FY2021/22Q4 FY2021/22
Aggregate Leverage
(%)
39.9%38.4%
Interest Coverage
Ratio (times)
6.4x6.4x
Average Term to
Debt Maturity (years)
3.5 years3.8 years
Average Cost of
Debt (%)
2.3%2.4%

My Observations: The REIT’s debt profile continues to remain very healthy in the current quarter under review – based on its interest coverage ratio of 6.4x, the regulatory limit for its aggregate leverage is set at 50.0% – and looking at its current aggregate leverage at 38.4%, there still remains some headroom the the REIT to embark on more yield-accretive acquisitions as and when an opportunity to do so comes along.

Another thing to note about the REIT’s aggregate leverage is that, the 1.5pp drop compared to the previous quarter was mainly due to the repayment of loans, and also the recognition of revaluation gain on its investment properties.

Still on its borrowings, 70.5% of them are at fixed rates (and as such, its impact as a result of the coming interest rate hikes by Fed is minimised.)

Finally, in terms of its debt maturity profile, its also very well-spread out in the years ahead – with 13.3% of its borrowings maturing in the coming FY2022/23 ahead, 8.9% in FY2023/24, 9.6% in FY2024/25, and 68.2% of its borrowings maturing only in FY2025/26 and beyond.

Distribution Payout to Unitholders

For the current quarter under review, the REIT’s management have declared a distribution payout of 3.49 cents/unit – a 5.8% increase from the payout of 3.30 cents/unit declared for the same time period last year.

Together with the 3.35 cents/unit declared for the first quarter, 3.47 cents/unit declared for the second quarter, and 3.49 cents/unit declared for the third quarter, the REIT’s total distribution payout to its unitholders for the full-year 2021/22 was 13.80 cents/unit – when compared against the 12.55 cents/unit declared in the previous financial year 2020/21, this was a 10.0% improvement.

In case you’re wondering if you’re allowed to opt to receive additional units of the REIT over cash, good news – just like in the previous quarter, you are able to do so.

If you are a unitholder of the REIT, do take note of the following dates on its latest distribution payout, along with deadlines for you to return your completed form if you want to receive units of the REIT instead of cash (which is the default option):

Ex-Date: 05 May 2022
Record Date: 06 May 2022
Completion of Form: 31 May 2022 (if you want to receive units of the REIT instead of cash, then you will need to make sure that completed forms must be received by the REIT by this date; if you opt to receive cash, there’s nothing you need to do, as cash payment is the default option)
Payout/Crediting of Units Date: 15 June 2022

Closing Thoughts

Be it financial performance, portfolio occupancy, or debt profile, I am very satisfied with the REIT’s latest set of statistics (and I’m sure you’ll agree with me on this as well.)

As to whether or not I will be receiving units of the REIT, or cash this time round, I will have to wait and see the price of the REIT in which I will be receiving before making a decision.

With that, I have come to the end of my review of Mapletree Industrial Trust’s latest results for the fourth quarter, as well as for the full-year ended 31 March 2022. As always, do take note that everything (particularly my thoughts) you’ve just read in this post are purely my own, which I am sharing for educational purposes only. They do not represent any buy or sell calls for the REIT’s units. You’re strongly encouraged to do your own due diligence before making any investment decisions.

Related Documents

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

 

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