Friday, July 26, 2013

Mapletree Industrial Trust

Mapletree Industrial Trust (MINT): 1QFY14 results in line; distributable income increased 9% y/y to $40.2m, DPU to 2.43 (+7.5%). Gross revenue surged 12.3% to $75.1m and NPI grew 8.5% to $52.5m led by higher rent reversions (10-41%) across all segments. CS expect rent reversions are expected to normalise eventually. Portfolio occupancy remain fairly resilient at 95.5% with weighted average lease to expiry of 2.5 years. Gearing of 35.8% with 2.5 years average term of debt and 2.4% average cost of debt. AEI updates: (1) 63% of the new space at Woodlands Central Cluster has been committed (received TOP); (2) AEI at The Signature has been completed (enhanced frontage and conversion of gym to business park space), and (3) Kulicke & Soffa and Equinix (both BTS) and Toa Payoh North 1 AEI are on track to complete in 4Q13-2H14. DB expect near-term growth to slow as a few tenants vacate, ongoing AEIs and its Build-To-Suit project should underpin medium term growth. Mgmt expects rents to remain stable near-term although the large incoming supply may exert pressure in the medium term. Mgmt is actively back-filling the space to be vacated by CS (c. 12% committed). The relocation of SMEs to Iskandar is a longer-term risk, mitigated by MINT’s well-diversified tenant base. Valuations are attractive at FY13/14E yield of 6.7%, implying 430bps spread. Broker recommendations: CS maintain OUTPERFORM with TP of $1.67; DB has BUY rating and TP of $1.54;

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