Macquarie Research SREITs results review
30 July 2012 7
3. Industrial REITs
AREIT - Ascendas REIT posted 1Q FY3/13 distribution income of S$76.5m (+16.1% YoY, +5.0%
QoQ) and 3.53 S cents DPU, in line with our estimates. Revenue increased 18.4% YoY to
S$142.0m, underpinned by the completion of development projects and acquisitions. Due to
higher electricity expenses, land rent and property tax, NPI rose by a lower 13.9% YoY to
S$101.1m. Occupancy of its overall portfolio and multi-tenanted buildings remained healthy at a
respective 96.4% and 92.8%. Circa 81,000 sqm of renewals were signed during the quarter, and
at improved rates of 10–21%. We expect this positive rent reversion trend to continue over the
next 2 years, as spot rents are 15-35% and 29-88% higher than AREIT’s passing rents for the
9.1% and 26.2% of leases (by property income) expiring in FY3/13 and FY3/14, respectively.
AREIT’s gearing has improved to 32.7%, which implies debt headroom of circa S$760m for new
acquisitions before reaching 40%. Historically, the group has made new investments of S$300–
500m per annum. AREIT continues to be the dominant player within Singapore’s industrial
property sector, but our preferred pick within the industrial space remains Mapletree Logistics
Trust given its higher total return of 25%.
MLT - Mapletree Logistics Trust reported 1Q FY3/13 distribution income of S$41.1m (+5.9%
YoY, -0.5% QoQ) and 1.70 S cents DPU, in line with our estimates. Revenue rose 17.1% YoY to
S$77.1m, attributable to 7 Japan acquisitions made in Mar 2012, as well as 2 properties each from
Malaysia and South Korea purchased in Feb 2012 and Mar 2012, respectively. The strong topline
growth flowed through to NPI, which increased 18.4% YoY to S$67.5m, in line with our estimates.
Portfolio occupancy inched upwards by 0.3ppt QoQ to 99.0%, led by Singapore which saw a
quarterly improvement of 0.8ppt to 99.6% due to strong demand for its 3 multi-tenanted properties
post conversion from single-user assets. Hong Kong, Japan, China, Vietnam and South Korea all
achieved near or full occupancy. To date, MLT has renewed/replaced 42% of the 341,000 sqm in
NLA (12.7% of total leases) expiring in FY3/13. Rent reversion moderated slightly by 2ppt QoQ,
but still healthy at +10%. MLT successfully refinanced a JPY7b (or S$113m) loan due in Apr 2012
with the issuance of a new 4-yr term loan, which reduced its expiring debt in FY3/13 to S$138m,
or 8% of total debt (vs. 16% previously). The stock is our top industrial SREIT, offering an
attractive total return of 25%.
MINT - Mapletree Industrial Trust posted 1Q FY3/13 distributable income of S$36.9m (+27.1%
YoY, +3.1% QoQ) and DPU of 2.26 S cents, above our estimates due to lower-than-forecasted
property and interest expenses. Revenue increased 21.6% YoY to S$66.9m, attributable to
improved occupancies, higher rents and acquisition of Tranche 2 of JTC Corporation’s portfolio.
Due to lower operating capital expenses, NPI rose by a higher 26.4% YoY to S$48.3m. Flatted
factories, business park buildings and stack-up/ramp-up buildings, which accounted for 91% of
total NPI, increased 44.3%, 2.9% and 5.6% YoY, respectively. Gross rents rose 0.6% QoQ to
S$1.56 psf/mth, with positive rent reversions across all segments. For renewal leases in flatted
factories, business park buildings and stack-up/ramp-up buildings, rents were signed at higher
rates of +22.0%, +9.3% and +31.7%, respectively. As for new leases signed, these three
segments saw respective increases of +20.8%, +18.9% and +26.7% over passing rents. Retention
rate remained healthy at 71.1%, while occupancy was flat QoQ at 94.9%. Construction has started
for 3 development projects in Toa Payoh North, Woodlands Central and Serangoon. We continue
to like MINT for its resilient and well-diversified portfolio.
[email protected] FIRST LAST 07/30/12 11:51:26 PM BNP Paribas (Singapore) {Asset Mgmt}