Mapletree Industrial Trust

Mapletree Industrial Trust (MINT): 4QFY14 results at the higher end of street estimates, with distributable income of $42.6m (+9.5% y/y) and DPU up 5.9% to 2.51¢, mainly from lower-than-expected operating expenses. Meanwhile, gross revenue rose 4.2% to $75.2m and NPI accelerated 7.5% to $53.3m on the back of higher rental rates secured for leases across all segments except business park, with higher occupancies for flatted factories. Portfolio occupancy declined 1.2ppts q/q to 91.3% due to the exit of a large tenant at a business park, as well as an increase in leasable area (+0.8% of gfa) upon completion of asset enhancement works at Toa Payoh North 1 Cluster. Overall portfolio has weighted average lease term of 2.5 years. Aggregate leverage ratio lowered 1.9ppts to 34.4% on weighted average tenor of 2.6 years and average funding cost of 2%. Over the next three years, MINT's portfolio GFA is expected to increase by 4.3% from the current 19.7m sf. At $1.42, MINT trades at 1.2x P/B and offers an attractive 7.1% yield, in line with industrial REIT peers' average of 6.9%. Latest broker ratings: Deutsche maintains Buy, with slightly higher TP of $1.57 (from $1.48) UBS maintains Neutral with TP of $1.36