Mapletree Industrial Trust Remains Strong With DPU Growth



Key Highlights:

  • Mapletree Industrial Trust's 2Q19 DPU grew 4%

  • The annualised yield and price to book ratio are 5% and 1.63 respectively


1. Dividends


Net property income and distributable income grew 13.3% and 12.1% to $80m and $63.5m respectively. The increase was mainly due to:

  • Contribution from new properties, 18 Tai Seng, 30A Kallang Place and Mapletree Sunview 1

  • Outperforming segment of hi-tech building and flatted factories

The annualised yield is 5%, which is at its historical average.


Source: reitscompass's REITs Insider ratings



2. Portfolio


Portfolio occupancy dropped to 90.5%, mainly affected by the lower occupancies of light industrial. With the recent placement, portfolio leverage dropped to 29.2%. The interest cost is 2.9%, the good news is downside risk is hedged with 87.9% of the loans are on fixed rates.


It is currently trading at a price to book ratio of 1.63.



3. Growth catalyst


Moving forward, the industrial sector will be affected by the trade war and economic slowdown. The good news is that the supply of industrial space is tapered down which may help to stabilise the space. The REIT has also acquired 10 data centres in US under a 50:50 joint venture with its parent company. This will increase the REIT's portfolio exposure on data centres to double-digits, which will potentially become the key driver to its rental income.



Summary


Mapletree Industrial Trust has been a growth REIT in the past few years. The management managed to grow its distributions over the years. It is one of the S-REITs that we like. However, the current pricing is the near the high side, we will continue to wait for a better investment opportunity.



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