Mapletree Industrial Trust

Mapletree Industrial Trust (MIT) results were in-line, with 3QFY14 DPU at 2.51¢ (+8% y/y, +2% q/q), lifting 9MFY14 DPU to 7.41¢ (+8%). For the quarter, gross revenue and net property income (NPI) was up 9% and 12% respectively, due mainly to higher rental rates secured across all the property segments and higher occupancies in Flatted Factories. Average portfolio passing rent rose 2% q/q to $1.73 psf per month (psf/mth), although average portfolio occupancy decreased slightly from 93.9% to 92.5%, due mainly to the increase in leasable area contributed by the completion of K&S Corporate Headquarters. Through proactive lease management, there is limited renewal risk with only 5% of leases (by gross rental revenue) expiring in FY14, with no single tenant and trade sector accounting for more than 3% and 15% of the portfolio’s monthly rental revenue, underpinning MIT’s stable operational performance. MIT’s balance sheet remains healthy with an aggregate leverage ratio of ~36.3% and interest coverage of 7.3x, with a weighted debt maturity of 2.8 years. Going forward, MIT guides that while industrial rents are expected to remain stable in the near term, the large supply pipeline of industrial space may exert downward pressure on rents in the medium term. As such, MIT will adopt a disciplined approach to investment opportunities and proactively drive organic growth while taking economic developments into consideration. At the current price, MIT trades at an annualized 9M14 yield of 7.4% and 1.2x P/B versus its Industrial peers of 7.9% forward yield and 1.05x P/B. Latest broker ratings as follows: CIMB upgrades to Buy with TP $1.52 (prev. $1.48)