Mapletree Industrial Trust - OCBC Investment 2022-04-27: Strong End To FY22


Mapletree Industrial Trust - Strong End To FY22

  • Mapletree Industrial Trust's 4QFY22 (financial quarter to end-Mar 2022) distribution per unit (DPU) grew 5.8% year-to-year to S$0.0349.
  • Mostly positive rental reversions for renewal leases.
  • Overall portfolio occupancy improved to 94.0%.

Mapletree Industrial Trust's 4QFY22 results met our expectations

  • Mapletree Industrial Trust (SGX:ME8U) reported its 4QFY22 (Jan 2022 to Mar 2022) results which met our expectations. Gross revenue and net property income (NPI) jumped 35.5% and 35.3% y-o-y to S$164.1m and S$124.2m, respectively. The significant increase was due largely to contribution from acquisitions. DPU grew 5.8% y-o-y to S$0.0349, and this was boosted by the distribution of divestment gains from the sale of 26A Ayer Rajah Crescent.
  • For FY22, Mapletree Industrial Trust’s NPI rose 34.5% to S$471.981m and DPU grew 10.0% y-o-y to S$0.1380, with the latter forming 101.5% of our forecast.
  • Mapletree Industrial Trust's management mentioned during the analyst briefing that its data centre assets in North America and Singapore are mostly on triple-net leases, and thus tenants are responsible for their own electricity costs. The main impact will come from its multi-tenanted properties in Singapore. Utility costs amounted to ~S$6m for Mapletree Industrial Trust in FY22, which is less than 5% of its property operating expenses. Its fixed tariff rate contract is expiring at the end of May 2022, and upon entering into new utility contracts, the management expects such costs to potentially double or triple, which could result in a -2% to -3% impact on its NPI.

Positive rental reversions (renewal leases) for three out of four segments in 4QFY22

  • Mapletree Industrial Trust registered another quarter of decent rental reversions in 4QFY22. This came in positive at 0.6% for Flatted Factories, 2.0% for Hi-Tech Buildings and 3.0% for Stack-Up/Ramp-Up Buildings. The only negative came from its Business Park Buildings (-2.1%). Average gross rental rate for Mapletree Industrial Trust’s Singapore portfolio remained unchanged q-o-q for 4 consecutive quarters at S$2.13 psf/month.
  • Overall portfolio occupancy rose 0.4 percentage point (ppt) q-o-q to 94.0% due to an uplift in Singapore (+0.7 ppt q-o-q to 94.4%), as its US portfolio occupancy remained unchanged at 93.3%. Tenant retention rate remained high and stable at 83.9% in 4QFY22 for its Singapore portfolio.

OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2022-04-27
SGX Stock Analyst Report BUY MAINTAIN BUY 3.05 DOWN 3.420