Broker: Maybank Research Pte Ltd
Date of Report: July 30, 2025

Mapletree Industrial Trust: Navigating Headwinds with Stable Yields and Strategic Portfolio Moves

Investment Overview: Resilient Performance Amid US Data Centre Drag

Mapletree Industrial Trust (MINT), a leading Singapore-listed REIT, continues to demonstrate resilience despite headwinds from its US data centre (DC) portfolio. The trust reported a 1QFY25/26 distribution per unit (DPU) of SGD 3.27 cents, reflecting a decline of 2.7% quarter-on-quarter and 4.7% year-on-year. This dip is primarily attributed to lower contributions from US DCs, a weaker USD, and the absence of distribution top-ups. Despite these challenges, MINT maintains a reasonable valuation with a healthy yield of around 6%, underpinned by its expanding presence in regional DCs and hi-tech facilities.

Quarterly Financial Performance: Key Highlights and Metrics

• 1QFY25/26 Revenue: SGD 175.9 million, up 0.3% year-on-year, but down 1.1% quarter-on-quarter.
• Net Property Income (NPI): SGD 133.6 million, rising 0.8% year-on-year and 1.9% quarter-on-quarter.
• Distribution to Unitholders: SGD 93.7 million, down 2.2% quarter-on-quarter and 3.7% year-on-year.
• DPU: 3.27 cents, a 2.7% quarter-on-quarter and 4.7% year-on-year decline.
• Portfolio Occupancy: 91.4%, down from 91.6% in the previous quarter, reflecting lower occupancy in the DC portfolio and Singapore’s general industrial buildings.
• Gearing: Stable at 40.1%.
• Cost of Debt: 3.1%.

Revenue and NPI Breakdown by Segment (SGD millions)

Distribution and Divestment: Portfolio Quality Enhancement

MINT’s quarterly distribution from joint ventures declined due to higher debt costs after the repricing of matured interest rate swaps. Additionally, the absence of divestment gains further pressured distributions to unitholders.
During the quarter, MINT proposed the divestment of Singapore assets — including two business parks and a hi-tech building — at a slight premium to book value, achieving a gross yield of 8.3%. This strategic move is aimed at strengthening portfolio quality and creating debt headroom, with pro-forma gearing expected to drop to 37%. The divestment positions MINT to pursue potential acquisitions, especially in the data centre space.

Operational Metrics: Occupancy and Rent Reversion

• Occupancy Rate: Portfolio occupancy dipped to 91.4% from 91.6%, mainly due to lower occupancy in US data centres and Singapore’s general industrial buildings.
• Rent Reversion: Healthy +8.2% for the Singapore portfolio, with broad-based support.

Estimate Changes and Earnings Outlook

Maybank has revised DPU estimates for FY26 and FY27 downwards by 2.2% and 3.2%, respectively, reflecting lower DC contributions and lost income from divested assets. The DDM-based target price remains unchanged at SGD 2.20, supported by a lower cost of equity (now at 6.9%, down from 7.2%).

Key Financial Projections (SGD millions unless otherwise stated)

Valuation: Attractive Yield with Downside Risks

Valued using a 3-stage DDM model, MINT’s cost of equity has been revised lower in light of broader market conditions. While distributable income is expected to decline in the near term due to lower JV contributions and asset sales, the REIT offers an attractive yield and retains acquisition flexibility. Downside risks include further drops in occupancy, especially in Singapore’s general industrial buildings, higher interest rates, and pressure on operating margins.

Strategic Positioning: Growth, Resilience, and ESG Focus

• Portfolio Scale: MINT is the third-largest industrial S-REIT, with 141 properties and SGD 8.8 billion in assets under management (AUM).
• Geographic Diversification: Asset footprint spans Singapore, the US, and Japan, with recent entry into the Japanese market through a data centre acquisition in Osaka.
• Data Centre Growth: Data centres now comprise a significant share of portfolio NPI, projected to generate 59% of FY24 NPI, up from 31% in FY20.
• Strong Balance Sheet: Aggregate leverage of 38.4%, with an estimated SGD 1.7 billion debt headroom (at 45% limit) for growth opportunities.

Key Growth Drivers and Historical Milestones

1. Redevelopment of Kolam Ayer 2 cluster into a high-tech precinct at SGD 263 million, with an 8.0% yield-on-cost.
2. Acquisition of remaining 60% stake in 14 US data centres for SGD 299.5 million in June 2020.
3. May 2021: Purchase of a USD 1.32 billion, 29 US data centre portfolio from Sila Realty Trust. This raised hi-tech contribution to nearly 60% of AUM.
4. Entry into Japan in May 2023 with the acquisition of a data centre in Osaka for JPY 52 billion.

ESG and Corporate Governance: Sustainable and Inclusive Practices

Environmental Initiatives:

• Steady reduction in electricity and water intensity across Singapore properties, with targets to further lower Scope 2 GHG emissions and increase solar capacity.
• BCA Green Mark Gold certifications achieved for eight Singapore property clusters in FY22.
• Sustainability clauses introduced in new leases for hi-tech and business park buildings.

Governance and Social Commitment:

• Externally managed by a wholly-owned subsidiary of Mapletree Investments, with a strong pipeline and capital markets access.
• Board independence is high: six of eleven members are independent.
• Management fees are competitive with peers, and key management remuneration remains below 2% of distributable income.
• Payout ratio for taxable income consistently at 100%, above the 90% minimum threshold for tax transparency.
• Strong support for SMEs and tenants during the pandemic, with SGD 12.7 million in rental reliefs provided in FY21.
• Commitment to staff professional development and CSR, with a target to achieve 30% female board representation by 2030.

Financial Ratios and Balance Sheet Strength

Risks and Downside Factors

• Potential for higher interest rates impacting debt servicing costs.
• Lower occupancy in both US DCs and Singapore factories could further pressure income.
• Rising operating costs may compress NPI margins.
• Economic slowdown could result in lower leasing demand and rental rates.
• Termination of long-term leases may weaken tenant retention rates.

Shareholder Structure and Market Performance

• Major Shareholders: Mapletree Investments Pte Ltd (27.0%), The Vanguard Group, Inc. (2.7%), Norges Bank Investment Management (1.2%).
• Market Capitalisation: SGD 5.8 billion (USD 4.5 billion).
• Issued Shares: 2,835 million.
• 52-Week High/Low: SGD 2.56/1.84.
• 3-Month Avg Turnover: USD 14.4 million.

Conclusion: BUY Rating Maintained for Yield and Strategic Flexibility

Despite near-term earnings pressure from its US DC portfolio and Singapore asset divestments, Mapletree Industrial Trust stands out for its stable yield, strong balance sheet, and strategic portfolio positioning. The trust’s proactive measures to unlock value and strengthen its asset mix, coupled with potential for future acquisitions, support the investment case. With a maintained BUY rating and a target price of SGD 2.20, MINT remains an attractive option for investors seeking resilient income and long-term growth in the industrial and data centre REIT sector.