UOB Kay Hian maintains ' buy' call on MINT, lifts TP to $3.72

UOB Kay Hian maintains ' buy' call on MINT, lifts TP to $3.72

UOB Kay Hian analyst Jonathan Koh maintains his &ldquo buy&rdquo call on  Mapletree Industrial Trust (MINT), lifting his dividend discount model (DDM)-based target price to $3.72 from $3.63 previously. 

He also increased his FY22F and FY23F distribution per unit (DPU) forecast by 1% and 3% respectively, due to strong contributions from the REIT&rsquo s newly acquired data centers. 

MINT reported a DPU of 3.47 cents for 2QFY22, an 11.9% growth y-o-y, above UOB Kay Hian&rsquo s expectations.   Its gross revenue and net property income (NPI) grew by 50.5% and 47.4% y-o-y respectively. This was driven by the consolidation of the first data centre joint venture with sponsor Mapletree Investments, the acquisition of 8011 Villa Park Drive in Richmond, Virginia, as well as the acquisition of 29 US data centres completed on 22 Jul 21. 

The NPI yield for the acquisition of the data centers located across 18 states in the US is 5.1%, says Koh. He adds that the acquisition increased MINT&rsquo s assets under management (AUM) exposure to data centers to 56.3%, compared to 41.2% previously. 

The portfolio has a long weighted average lease to expiry (WALE) of 7.9 years, which will increase MINT&rsquo s overall WALE from 4.0 to 4.6 years. Koh notes that 81.7% of leases are triple net leases with all outgoings borne by tenants, while 89.4% of leases have rental escalation ranging from 1.5 % to 3.0% per year. 

The acquisition is estimated to increase pro forma FY21 DPU by 3.3% and NAV by 6.0%, says Koh. 

MINT recorded 93.7% portfolio occupancy in 2QFY22. The occupancy of its Singapore portfolio improved marginally by 0.2% to 93.6%, driven mainly by flatted factories. 

Meanwhile, the occupancy for its North America portfolio dropped by 3.9% q-o-q to 93.9% due to lower average occupancy of 87.8% for the newly-acquired 29 US data centres. MINT has appointed an external leasing firm to lease out the vacant commercial space at 250 Williams Street in Atlanta to improve the occupancy for its North America portfolio. 

MINT aims to allocate two-thirds of its AUM to data centres over the medium term of 3 to 5 years. Koh highlights that the Covid-19 pandemic has boosted demand for its data centres in Singapore and North America. &ldquo MINT&rsquo s hi-tech buildings, business park buildings and flatted factories are less affected by the Covid-19 pandemic,&rdquo he adds. 

The REIT is also pursuing more growth through acquisitions of data centers. MINT has the right of first refusal from the sponsor Mapletree Investments to acquire the remaining 50% stake in their second data centre, JV Mapletree Rosewood Data Centre Trust (MRODCT). The acquisition could materialise within 2HFY22. 

MINT is also on the lookout to acquire data centres from third-party vendors, says Koh. It intends to diversify geographically to Europe and other gateway cities in the Asia Pacific region. 
 

 

Mapletree Industrial Trust Q2 DPU up 11.9% to 3.47 Singapore cents on US income lift

MAPLETREE Industrial Trust' s (MIT) second-quarter distribution per unit (DPU) rose to 3.47 Singapore cents from 3.1 cents a year ago. 

Income distributable to unitholders grew 21.3 per cent to S$88.4 million for the three months to Sep 30, following a boost in revenue from assets in the US. 

Net property income climbed 47.4 per cent to S$120.3 million as gross revenue rose 50.5 per cent to S$155.6 million.

The increase came on the consolidation of revenue from 14 US data centres previously held by joint venture Mapletree Redwood Data Centre Trust, 29 data centres in the US acquired for US$1.32 billion, and a data centre in Virginia.

Overall, average portfolio occupancy in Q2 fell to 93.7 per cent from 94.3 per cent in the preceding quarter after a reduction in occupancy for the North American portfolio.

The average occupancy rate for the portfolio declined to 93.9 per cent from 97.8 per cent following the acquisition of the 29 data centres, which had a lower average occupancy rate of 87.8 per cent.

Occupancy for the Singapore portfolio improved to 93.6 per cent from 93.4 per cent as higher occupancies were registered for flatted factories and light industrial buildings.

The weighted average lease to expiry (WALE) for the overall portfolio increased to 4.3 years as at Sep 30, from 3.7 years as at June 30. This was due to the long WALE of the 29 US data centres of 7.6 years as at end-September. 

The aggregate leverage ratio increased quarter on quarter from to 39.6 per cent from 31 per cent after loans drawn to fund the acquisition in the US. 

" Following the completion of the US portfolio acquisition, MIT' s assets under management increased from S$6.7 billion as at June 30, 2021, to S$8.5 billion as at Sep 30, 2021, with data centres accounting for about 52.9 per cent.

" We remain focused on retaining and working with our tenants amid signs of a gradual but uneven global economic recovery," said Tham Kuo Wei, chief executive officer of MIT' s manager. 

The books close on Nov 3. The DPU ( $0.0347 ) will be paid out on Dec 3.

 

Mapletree Industrial Trust Delivers 11.9% Year-on-Year Growth for 2QFY21/22 Distribution per Unit
* Driven by contributions from portfolio acquisitions of data centres in North America
* Expands data centre presence with the completion of the US$1.32 billion acquisition of 29 data centres in the United States of America (the United States)
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