Mapletree Industrial Trust fiscal 2Q net property income flat on year-ago gain

A Singapore 10-dollar note Photo by Leslie Shaffer

Mapletree Industrial Trust reported on Tuesday its fiscal second quarter net property income edged down 0.1 percent on-year to S$70.59 million, amid a one-off gain in the year-ago period and lower occupancy in the Singapore portfolio.

Gross revenue for the quarter ended 30 September fell 0.4 percent on-year to S$92.22 million, the trust’s manager, Mapletree Industrial Trust Management, said in a filing to SGX after the market close on Tuesday.

That was due to pre-termination compensation of S$3.1 million received in the year-earlier quarter when Johnson & Johnson ended its lease, it said, adding that excluding that gain, gross revenue would have risen 3.1 percent on-year.

The Singapore portfolio also had lower occupancy in the quarter, which was offset by contributions from phase two of the build-to-suit project for HP Singapore and recently completed development projects, the trust’s manager said.

Average portfolio occupancy fell to 86.7 percent in the fiscal second quarter from 88.3 percent in the fiscal first quarter, it said.

The Singapore portfolio occupancy fell to 86.2 percent in the fiscal second quarter from 87.8 percent in the previous quarter, partly due to scheduled lease terminations at 7 Tai Seng Drive to prepare for upgrading works, it said. The last tenant in that property is expected to exit in the fourth quarter of this year, the filing said.

“Following the completion of the upgrading works in the second half of 2019, the seven-storey industrial property will be fully leased to an established information and communication technology company for an initial lease term of 25 years with annual rental escalations,” the trust’s manager said.

Distribution rises

Distributable income for the quarter rose 4.9 percent on-year to S$56.66 million, on contributions from development projects and from the trust’s 40 percent interest in a portfolio of 14 data centers in the U.S., the trust’s manager said.

The distribution per unit (DPU) rose 0.3 percent on-year to 3.01 Singapore cents from 3.00 Singapore cents in the year-ago period, it said. The pre-termination compensation contributed 0.17 Singapore cent to the year-ago DPU, it said.

For the first half, net property income rose 0.8 percent on-year to S$140.05 million, while gross revenue increased 1.3 percent on-year to S$183.71 million, it said. The DPU for the first half was 6.01 Singapore cents, up 1.5 percent on-year from 5.92 Singapore cents in the year-ago period, it said.

Outlook

Mapletree Industrial Trust’s S$76 million build-to-suit data center development, Mapletree Sunview 1, was completed in July and is fully leased to a data center operator for an initial term of more than 10 years, it said.

The asset enhancement initiative at 30A Kallang Place was completed in February and the trust has commitments for 75 percent of the total net lettable area, with most leases set to begin progressively by the first quarter of next year, the trust’s manager said.

In its outlook for Singapore, the trust’s manager pointed to concerns that global political and trade tensions may hurt business sentiment and economic growth momentum.

In addition, it noted that imminent new supply of competing industrial space was expected to moderate market rents and occupancy rates. It said it would stay focused on tenant retention to keep a stable portfolio occupancy.

Mapletree Industrial Trust’s portfolio has 86 industrial properties in Singapore and 14 data centers in the U.S., via a 40 percent interest through a joint venture with its sponsor Mapletree Investments, it said.

 

Get the Shenton Wire morning briefing in your inbox