Mapletree Industrial Trust 30 Sep 2022

Mapletree Industrial Trust 2QFY22/23 Financial Results

Mapletree Industrial Trust 30 Sep 2022

On 26th October 2022, Mapletree Industrial Trust announced their 2QFY22/23 financial results. If you have been following this REIT, the stock price has been plunging.

Many investors have been tempted to jump in to add this popular REIT to their stock portfolio. How did Mapletree Industrial Trust fare? Let us take a look at its latest results below.

Mapletree Industrial Trust 2QFY22/23 Financial Results

Gross revenue rose 12.8% to S$175.5 million. The gain was driven by contribution from the 29 data centres acquired in the United States.

However, the profit was partially offset by higher property operating expenses and borrowing costs. The huge jump in property expenses was glaring.

As a result, Distribution Per Unit (DPU) fell 3.2% to 3.36 cents as compared to 3.47 cents a year ago.

2QFY22/23
(S$’000)
2QFY21/22
(S$’000)
Change
Gross Revenue 175,512 155,560 12.8%
Net Property Income 130,325 120,320 8.3%
Property expenses
(45,187) (35,240) 28.2%
Amount Distributable To Unitholders 88,977 88,377 0.7%
Distribution Per Unit (“DPU”) (cents) 3.36 3.47 (3.2%)

Mapletree Industrial Trust 1HFY22/23 Financial Results

Similar to the above results, high operating expenses offset the gain in Gross Revenue.

1HFY22/23
(S$’000)
1HFY21/22
(S$’000)
Change
Gross Revenue 343,317 283,619 21.0%
Net Property Income 283,619 225,039 15.6%
Property expenses
(83,089) (58,580) 41.8%
Amount Distributable To Unitholders 181,115 171,073 5.9%
Distribution Per Unit (“DPU”) (cents) 6.85 6.82 0.4%

Debt

Gearing ratio stood at 37.8% with weighted average tenor of debt standing at 3.5 years.

As of 30th September 2022, 74.2% of the debt are hedged at fixed interest rates which should provide some form of mitigation against the rising interest rates.

Occupancy

Overall portfolio occupancy stood at 95.6%. The Weight Average Lease Expiry (WALE) for its North America Portfolio and Singapore Portfolio stood at 6.0 years and 4.0 years respectively.

As you can see from the comparison below, occupancy improved across its different segments which is good news for Mapletree Industrial Trust.

Current Dividend Yield

Based on the current share price of S$2.25 and FY21/22 full year distribution of 13.80 cents, this translate to a current dividend yield of 6.13%.

Let’s say if DPU fell 3.0% to 13.30 cents, the estimated current dividend yield is 5.91%.

Summary of Mapletree Industrial Trust 2QFY22/23 Financial Results

In my opinion, the rising energy cost and inflation woes will not go away anytime soon. Thus, the increasing property operating expenses and borrowing costs will continue to exert pressure on distributions.

Net absorption across the primary U.S. data centre markets of Northern
Virginia, Dallas, Silicon Valley, Chicago, Phoenix, New York Tri-State and Atlanta tripled year-on-year in 1H2022 to 453.4 megawatts (MW) as large hyperscale users procured cloud capacity for long-term growth. This also spell news of further increase operating expenses.

The manager announced the release of the S$6.6 million will begin in 3QFY22/23 over three quarters to mitigate rising operating and borrowing costs. However, I see this as only a short term measure. In the long run, the manager should consider passing the increase operating cost to the tenants which was not mentioned anywhere.

If you were to ask me whether I will buy into Mapletree Industrial Trust right now, I will wait for more margin of safety.

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