Mapletree Industrial Trust (SGX:ME8U)'s DPU Was Down 7.4% Due To Income Retention

Mapletree Industrial Trust (SGX: ME8U) has recently announced its first quarter financial results. It is currently trading at 3.7% yield based on the last traded share price of $3.11.

Key Highlights:

  • Distribution per unit (DPU) and Dividend Yield (3.7%)

  • Price to book ratio (1.85)

  • Gearing (38.8%)

  • Interest coverage ratio (7.9x)

  • Portfolio occupancy rate (91.1%)

  • Growth catalyst

Background of Mapletree Industrial Trust

Mapletree Industrial Trust manages a portfolio of 87 industrial properties in Singapore and 17 data centres in North America through the joint ventures with its sponsor, Mapletree Investments. The properties in Singapore range from hi-tech buildings to light industrial buildings.

1. Distribution per unit and dividend yield

Based on its 1Q financial results, Mapletree Industrial Trust delivered a positive operational performance. Its distributable income was up 11.6% year-on-year. However, the DPU was down by 7.4%, this was mainly due to the enlarged unit base of 8.8% and retention of $7.1m of distributable income for cash flow flexibility during this pandemic period.

Based on its latest price, the REIT is currently trading at about 3.7% dividend yield. Historically, the REIT has been paying very consistent DPU, with steady growth over the years. However, its current 3.7% yield is significantly lower as compared to its average yield of 6.8% over the past 10 years.

2. Price to book ratio

Over the past 10 years, Mapletree Industrial Trust has been trading at an average price to book ratio of 1.22. Its current price to book ratio of 1.85 is overvalued and does not look attractive as it is well above its historical average.

3. Gearing

Portfolio leverage went up slightly to 38.8%. With the recent private placement of $410m, the REIT continues to maintain strong balance sheet for future acquisitions.

4. Interest coverage ratio

The REIT has an interest coverage ratio of 7.9 times, which is well above our preference of 4 times. Besides, the REIT maintains a low interest cost of 2.6%, with more than 86% of its debt is under fixed rate.

5. Portfolio occupancy rate

Portfolio occupancy maintains at 91.1%. Overall, the REIT experienced weaker occupancy rate across all its segments except data centres, which continue to outperform. The good news is 97% of its leases have in-built annual escalation of more than 2% on average.

Source: Mapletree Industrial Trust Presentation Slide

6. Growth Catalyst

While the REIT has diversified tenant base which covers essential services and data centres, which help to improve the portfolio resilience during this Covid-19 period, the management mentions that its $20m of rental reliefs would affect its full year distributable income this year.

The management remains bullish on the data centre segment and proposed to acquire the remaining 60% interest in 14 Data Centres in the US. This will further expand its data centre exposure to 39% of its total portfolio value.


The key financial metrics of the REIT still remain very healthy, with positive growth potential, consistent DPU and strong balance sheet. However, we think that the share price does not look attractive at current level, we will remain the REIT in the watchlist currently.

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