With a total of 85 properties in Singapore and 56 properties in North America (including 13 data centres held through the joint venture with Mapletree Investments Pte Ltd), Mapletree Industrial Trust (SGX:ME8U) was the second Mapletree REIT in my long-term investment portfolio to have made available its financial results for the first quarter of the financial year 2022/23 ended 30 June 2022 yesterday (25 July 2022) evening – the first was Mapletree Logistics Trust, which have published its results last Thursday (21 July 2022), and you can read my review about it here.

As a unitholder of the blue-chip industrial REIT, I have studied the published documents, and in this post, you will find a summary of its latest set of financial results, portfolio occupancy and debt profile, along with its distribution payout to its unitholders, as well as my thoughts about it.

Let’s begin:

Financial Results (Q1 FY2021/22 vs. Q1 FY 2022/23)

The following table is a comparison of the REIT’s results reported for the current quarter under review (i.e. Q1 FY2022/23 ended 30 June 2022) compared against that reported in the same time period last year (i.e. Q1 FY2021/22 ended 30 June 2021):

Q1 FY2021/22Q1 FY2022/23Variance (%)
Gross Revenue
(S$’mil)
$128.1m$167.8m+31.0%
Property Operating
Expenses (S$’mil)
$23.3m$37.9m+62.4%
Net Property
Income (S$’mil)
$104.7m$129.9m+24.0%
Distributable Income
to Unitholders
(S$’mil)
$82.7m$92.1m+11.4%

The double-digit percentage growth in its gross revenue (by 31.0% to S$167.8m) and net property income (by 24.0% to S$129.9m) were largely due to contributions from the 29 data centres located in the United States of America acquired in July 2021.

Accordingly, its property operating expenses also jumped 62.4% to S$37.9m as result of the property operating expenses incurred by the newly acquired data centres.

Its distributable income to unitholders went up by a smaller percentage (by just 11.4% to S$92.1m) mainly due to higher net property income, but partially offset by higher borrowing costs (attributed to the additional interest incurred in respect to the REIT’s acquisition of the 29 data centres in the United States) and manager’s management fees (due to better portfolio performance, along with an increase n the value of assets under management.)

Portfolio Occupancy Profile (Q4 FY2021/22 vs. Q1 FY2022/23)

Next, let us take a look at the REIT’s portfolio occupancy profile – where I will be comparing the statistics reported for the current quarter under review (i.e. Q1 FY2022/23 ended 30 June 2022) against that reported 3 months ago (i.e. Q4 FY2021/22 ended 31 March 2022) to find out whether or not it has continued to remain resilient:

Q4 FY2021/22Q1 FY2022/23
Portfolio Occupancy
(%)
94.0%95.3%
Portfolio WALE (by
Gross Rental Income – years)
4.1 years4.1 years

My Observations: The REIT’s portfolio occupancy have further improved by 1.3 percentage points (pp) to 95.3%, as a result of improvement in occupancy rates in its properties in Singapore (up from 94.4% in Q4 FY2021/22 to 96.0% in Q1 FY2022/23), as well as in North America (up from 93.3% in Q4 FY2021/22 to 94.0% in Q1 FY2022/23), with positive rental reversions recorded for all the lease renewals done in the quarter under review (i.e. Q1 FY2022/23.)

In terms of its lease expiry, it remains well-staggered over the next couple of years – with 10.6% of the leases expiring in the remaining quarters of the current financial year 2022/23, 18.3% of the leases expiring in FY2023/24, 16.4% of the leases expiring in FY2024/25, and 54.7% of the leases only expiring in FY2025/26 and beyond.

Debt Profile (Q4 FY2021/22 vs. Q1 FY2022/23)

Similar to how I have reviewed the REIT’s portfolio occupancy profile in the previous section, I will also be reviewing its debt profile by comparing the statistics for the current quarter under review (i.e. Q1 FY2022/23 ended 30 June 2022) against that reported in the previous quarter 3 months ago (i.e. Q4 FY2021/22 ended 31 March 2022) to find out whether or not it has continued to remain healthy:

Q4 FY2021/22Q1 FY2022/23
Aggregate Leverage
(%)
38.4%38.4%
Interest Coverage
Ratio (times)
6.4x6.2x
Average Term to
Debt Maturity (years)
3.8 years3.7 years
Average Cost of
Debt (%)
2.4%2.5%

My Observations: Compared to the previous quarter, the REIT’s debt profile have continued to remain healthy – its aggregate leverage, at 38.4%, still has some debt headroom for the REIT to embark on further yield-accretive acquisitions before the regulatory limit of 50.0% is reached.

72.3% of the REIT’s gross borrowings of S$2,940.7m has been hedged through interest rate swaps and fixed rate borrowings, which will reduce the impact of interest rate fluctuations on distributions.

In terms of the REIT’s debt maturity profile, it is also well-spread out over the next couple of years – with 13.2% (or S$388.5m) of the borrowings maturing in the remaining quarters of FY2022/23, 5.9% (or S$175.0m) of the borrowings expiring in FY2023/24, 2.7% (or S$80.0m) of the borrowings expiring in FY2024/25, and 78.2% (or S$2,277.2m) of the borrowings only expiring in FY2025/26 and beyond.

Distribution Payout to Unitholders (Q1 FY2021/22 vs. Q1 FY2022/23)

Mapletree Industrial Trust is one of the few Singapore-listed REITs that have continued to declare a distribution payout to its unitholders on a quarterly basis.

On that note, let us find out how much distribution the REIT’s management have declared for the current quarter under review, compared against the same time period last year (i.e. Q1 FY2021/22 ended 30 June 2022):

Q1 FY2021/22Q1 FY2022/23Variance (%)
Distribution Per
Unit (S$’cents)
3.35 cents3.49 cents+4.2%

Again, the “distribution reinvestment plan” (DRP) will be applied this time round – meaning you have a choice to receive your distributions either in cash (which will be the default option if you do not do anything), or in units of the REIT (where proceeds will be used to finance progressive funding needs of the re-development project at 161, 163, and 165 Kallang Way), or a mixture of both.

The following are some of the important dates to take note of regarding its distribution payout if you are a unitholder of the REIT:

Ex-Date: 01 August 2022
Record Date: 02 August 2022
Payout Date: 09 September 2022

Closing Thoughts

What’s not to like about the REIT’s latest Q1 FY2022/23 results – the double-digit percentage improvement in its financial performance (compared to the same time period last year) was helped by contributions from the newly acquired 29 data centres in the United States, portfolio occupancy held steady at 95.3% (with positive rental reversions for all the lease renewals in its Singapore portfolio), and finally, a healthy aggregate leverage at 38.4% (at this level, there still remains some debt headroom for the REIT to embark on further yield-accretive acquisitions.)

As a unitholder of the blue-chip industrial REIT, I am happy with its latest “report card”, and that the REIT is also one I will remain invested for the long-term.

For the remaining quarters of the financial year, my opinion is that it should be similar to the current quarter under review – with its financial performance helped by the contributions from the newly acquired data centres in the United States. Also, with just a small percentage of leases expiring in the remaining quarters of the current financial year, and also a small percentage of borrowings maturing in the same time period, they should continue to remain more or less similar to the statistics reported in the current quarter under review.

With that, I have come to the end of my review of Mapletree Industrial Trust’s Q1 FY2022/23 results. Please note that everything you’ve just read above are purely my own personal opinion which I am sharing for educational purposes only. They do not represent any buy or sell calls for the REIT’s units. As always, please do your own due diligence before you make any investment decisions.

Related Documents

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

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