Mapletree Industrial Trust (MINT)

Mapletree Industrial Trust (MINT): Good set of 1QFYMar12 results.
Revenue +13.3% yoy, driving a 13.6% yoy / 2.7% qoq increase in NPI, surpassing mgt’s forecast by 6.6%. Underlying organic growth was intact, with retention rate and portfolio occupancy rising, even as rents increased.
Portfolio occupancy improved from 93.2% to 94.3%, with strong upward rental reversions resulting in +2% qoq increase in avg passing rents to $1.52 psf.
DPU came in at 1.98cts, +2.5% qoq, and +8.8% ahead of mgt forecast. This translates to an annualized yield of 6.9%.

Catalysts to come from
i) positive rent reversion for remaining FY12 as the rental caps on 80% of its properties (flatted factories) expire on 30 Jun ’11, given that portfolio rents are below spot rents, and
ii) acquisition of tranche 2 of JTC’s 2nd phase divestment portfolio for $400m. This will boost MINT’s portfolio value and NLA by ~18% to $2.6b and 1.3m sm rptvly. An equity fund raising appears likely, as funding the acq entirely with debt would result in gearing rising from the current 36% to 45.5%. Mgt expects the acq to be CPU accretive. The transaction is on track for completion by end Aug ’11.

Mgt remains positive on the medium term outlook for industrial property.
MINT trades at 1.2x P/B, on par with A-Reit.
Deutsche maintains Buy with TP $1.30, for attractive valuation at 7.2% FY12E yield.
Macquarie, CIMB keeps at Outperform with TP $1.26, and $1.27 rptvly.