Singapore REITs - UOB Kay Hian 2020-01-23: MCT & MINT 3QFY20 Both In Line


Singapore REITs - MCT & MINT 3QFY20 Both In Line

Mapletree Commercial Trust 3QFY20 Results

  • Results in line. Mapletree Commercial Trust (SGX:N2IU) posted a 3QFY20 DPU of 2.46 S cents (+5.6% y-o-y), bringing 9MFY20 DPU to 7.09 S cents (+3.8% y-o-y). NAV per share increased 10% ytd to S$1.76.
  • Portfolio occupancy remained stable at 98.3% in 3QFY20 (+2.2ppt q-o-q). VivoCity achieved 100% committed occupancy for the second consecutive quarter, which is an impressive feat given its huge size with NLA of 1.1m sf. Mapletree Commercial Trust signed 148 leases with healthy retention ratio at 89.3% in 9MFY20. It achieved positive rental reversion of 6.7% for VivoCity.
  • Resilience from office/business parks. Occupancies were at 96.1% (+4.8ppt q-o-q) at PSA Building, 96.9% (+21.8ppt q-o-q) at Mapletree Anson and 100% (flat q-o-q) at Merrill Lynch HarbourFront (MLHF). Gross revenue and NPI from office/business park properties were up 30.6% and 31.2% y-o-y respectively in 3QFY20, driven by contribution from MBC II (acquisition completed on 1 Nov 19), higher rental income from new/renewed leases at MBC I, renewed leases at PSA Building and step-up rents in existing leases at both MBC I and MLHF.
  • Mapletree Commercial Trust was included in MSCI Singapore Index on 26 Nov 19. It has ample debt headroom of S$1.9b based on regulatory gearing limit of 45%.
  • Maintain HOLD and target price of S$2.38 based on DDM (required rate of return: 6.25%, terminal growth: 2.2%). Entry price is S$2.16.
  • See Mapletree Commercial Trust Share Price; Mapletree Commercial Trust Target Price; Mapletree Commercial Trust Analyst Reports; Mapletree Commercial Trust Dividend History; Mapletree Commercial Trust Announcements; Mapletree Commercial Trust Latest News.

Mapletree Industrial Trust 3QFY20 Results

  • Results in line. Mapletree Industrial Trust (SGX:ME8U) posted a 3QFY20 DPU of 3.16 S cents (+2.9% y-o-y), bringing 9MFY20 DPU to 9.39 S cents (+3.4% y-o-y). The stronger performance was driven by 18 Tai Seng (acquisition), 7 Tai Seng (acquisition of logistics property for upgrade into a data centre) and 30A Kallang Place (asset enhancement).
  • 50:20 JV with sponsor to acquire 13 data centres in the US and Canada. Distributions declared by JVs increased by 59.6% y-o-y to S$6.7m in 3QFY20. The acquisition of three fully-fitted hyperscale data centres was completed on 1 Nov 2019, while the remaining 10 powered shell data centres was completed on 14 Jan 20.
  • Portfolio occupancy improved slightly to 90.9% in 3QFY20 (+0.4ppt q-o-q). The Singapore portfolio occupancy was 90.5% (+0.3ppt q-o-q), with the improvement due to higher occupancies from Hi-Tech Buildings (+1.5ppt q-o-q) and Business Park Buildings (+3.2ppt q-o-q). The US portfolio occupancy was 97.8% (+0.4ppt q-o-q). The weighted average lease expiry increased 8.3% q-o-q from 3.6 years to 3.9 years due to the long WALE of newly-acquired Turnkey Portfolio of 7.8 years.
  • Largest redevelopment project on track. 62 out of 108 existing tenants at Kolam Ayer 2 Cluster have committed to new leases at alternative Mapletree Industrial Trust properties. Redevelopment of Kolam Ayer 2 Flatted Factory Cluster into a high-tech industrial precinct is on track to commence in 2H20, while completion is expected in 2H22.
  • Gearing increased to 34.1% (+4.9ppt qoq). Weighted average all-in funding cost stood at 3.0% (+0.1ppt q-o-q), while interest coverage ratio remained healthy at 6.8x (vs 6.6x in 2QFY20).
  • Maintain BUY and target price of S$2.90 based on DDM (required rate of return: 6.0%, terminal growth: 1.8%).
  • See Mapletree Industrial Trust Share Price; Mapletree Industrial Trust Target Price; Mapletree Industrial Trust Analyst Reports; Mapletree Industrial Trust Dividend History; Mapletree Industrial Trust Announcements; Mapletree Industrial Trust Latest News.

Jonathan KOH CFA UOB Kay Hian Research | Peihao LOKE UOB Kay Hian | https://research.uobkayhian.com/ 2020-01-23
SGX Stock Analyst Report BUY MAINTAIN BUY 2.900 SAME 2.900