Category: MIT
MIT – CIMB
Decent quarter
4Q12 results were decent in terms of DPU growth and rental reversions. While there was a qoq dip in portfolio occupancy, DPUs should remain stable, underpinned by occupancy and positive rental reversions.
4Q12/FY12 DPU slightly beat our estimates from higher-than-expected rental and margins (28%/106% of FY12) but met consensus expectations. We fine-tune our DPU estimates but keep our DDM target price (discount rate: 8.6%) and Outperform rating pending an analysts’ briefing.
Positive rental reversions
4Q12 NPI was up 23% yoy on increased contributions from acquisitions, higher occupancy and positive rental reversions. DPU was up a lower 14% yoy due to an enlarged equity base following an equity issuance to part-fund its previous acquisition from JTC. Qoq, DPU was up 3%, thanks to positive rental reversions. Rental reversions remained strong: Flatted Factories (+27%), Stack-Up/ Ramp-Up Buildings (+29%) and Warehouses (+15%) over preceding leases. We are slightly concerned about a 9% qoq dip in rentals for new flatted factory leases to S$1.75psf, which could suggest pressures in pushing rents and we would be seeking more clarification from management. Overall occupancy was flat at 94.9%, albeit with some dips from business parks and warehouses.
Strengthened balance sheet
Asset leverage inched down to 38% from 3Q12’s 39% on revaluation gains. During the quarter, management refinanced part of its 2012 loans by issuing a S$125m 7-year 3.75% fixed-rate MTN. Following this, average term to debt maturity has lengthened to three years from 2.5. Weighted average all-in funding costs were up only marginally to 2.3% from 2.2%.
Revaluation gains
A revaluation gain of S$94.1m was recognised from investment properties from higher rental revenue and occupancy, leading to NAV/unit growth of 6.3% qoq.
MIT – BT
MIT Q4 DPU up 15%; revenue jumps 24.3%
Reit manager expects MIT to continue doing well in the financial year ahead
MAPLETREE Industrial Trust (MIT) closes its financial year on a sweet note following a 26.4 per cent year-on-year jump in distributable income to $35.8 million during the fourth quarter ended March 31, 2012.
This led to the industrial real estate investment trust (Reit) offering a distribution per unit (DPU) of 2.22 cents for the period – 16.2 per cent higher than the forecast of 1.91 cents and 15 per cent more than the year before.
Gross revenue for the quarter was up 24.3 per cent at $66.3 million from $53.4 million the year before, driven by higher rental rates, stronger occupancy take-up and new contributions. Notably average passing rents rose to $1.55 per square foot (psf) per month from $1.53 psf per month in the quarter before. In addition, positive rental revisions were also achieved for properties such as flatted factories, stack-up/ramp-up buildings and warehouses.
Consequently, net property income was lifted by 23.4 per cent to $46 million over the same period.
Industrial REITs – OCBC
Expecting firm performance
• Poised for firm results
• Positive asset revaluation likely
• DPU yields remain attractive
Likely to witness healthy quarterly results
Industrial REITs are expected to kick off the reporting season for the financial quarter ending 31 Mar in mid-April. We believe the REITs will continue to post healthy YoY growth in distributable incomes and DPUs, driven by completion of acquisitions, sound occupancy rates and possibly positive rental reversions. On a sequential basis, the financial performances are expected to stay firm, as contributions from new acquisitions are anticipated to be partially offset by higher operating and financing expenses.
Asset revaluation to provide relief on gearing?
Four industrial REITs, namely AIMS AMP Capital Industrial REIT (AAREIT), Ascendas REIT, Mapletree Industrial Trust and Mapletree Logistics Trust (MLT), will also be concluding their financial years. This will likely be accompanied by a revaluation of their investment properties. Looking at the trend of URA rental and price indexes over the past year, we believe the REITs may likely experience revaluation gains in their portfolios. This may in turn provide some relief on their aggregate leverages, which have mostly been rising amid a spate of acquisitions. In fact, we note that MLT had already announced the completion of the valuations of its 98 properties late this week. The aggregate portfolio amount of S$3.9b, which will be reflected in its upcoming results, was 3.1% and 8.4% respectively to the book values of its investment properties QoQ and YoY.
Subsector yield the highest in S-REIT sector; Cache Logistics is our pick We also revisit the valuations and yields of SREITs, following the recent run-up in the general market. Based on Bloomberg consensus estimates and prices as at 19 Mar 2012, we note that the industrial subsector offers the highest current yield (8.1%), compared to 6.1-7.1% for other subsectors and 6.9% for the overall sector average. We are maintaining OVERWEIGHT on the industrial REIT subsector. Cache Logistics remains our preferred pick, given its attractive FY12F DPU yield of 8.5% and robust portfolio.
MIT – Lim and Tan
• There is talk that MIT is planning to launch a perpetual securities issue, while demand for such investment vehicles is “hot”.
• If true, as in MIT would have received approval from the MAS to treat such securities as “equity” (given they are “perpetual”, implications for industrial reits are positive.
• Key point is that coupon is likely usefully lower than yields industrial reits like MIT would be able to receive from new acquisitions.
• MIT is presently “consolidating” after trying, once again, to test the $1.20 level, which was the high reached soon after listing.
• We prefer Mapletree Commercial among the 3 Mapletree-related listings.
MIT – DBSV
New moves for Dragon Year
• 3Q12 results exhibited strong resilience
• Maiden asset enhancement programs to be embarked over next two years
• BUY, with slightly higher TP of S$1.26
Results in line. Gross rental and net property income of S$65.7m and S$45.6m were 23% and 24% above IPO forecasts respectively. This strong growth was largely due to full quarter contribution from the new acquisitions. Organic performance remained healthy with occupancy at a high c.95.1% (vs 94.5% in 2Q12), while rental rates inched up to est. S$1.56, ex acquisition portfolio. As a result, distributable income beat forecast by 28%, translating to a DPU of 2.16 Scts (+15% due to an enlarged share base).
Operational data still positive. Reversions remained at a strong c26-31% above passing levels for most sub-sectors. However, its business parks saw a slight downward reversion of c10% due to a higher base effect, which we believe is tenant specific.
New asset enhancement plans. MINT will embark on its maiden AEI works (starting 2Q11 till end 2013) to build an additional c200k of GFA as well as enhance the façade of its Toa Payoh North 1 & Woodlands clusters to meet growing demand for space at the respective clusters. The manager targets an IRR of c9% for both AEI projects when completed in 2H13.
BUY with revised TP S$1.26. Supported by strong earnings stream from a diversified portfolio, MINT is expected to deliver a stable set of results in the coming quarters. In view of the new AEI plans, we have raised our
FY14F DPU slightly by 1.1% to 8.6 Scts. As a result we adjusted our target price to S$1.26. Current price offers a FY12-14F yield of 7.5-8.1%.