CGS International
July 29, 2025

Mapletree Industrial Trust Delivers Resilient Yields Despite Occupancy Challenges: Full Singapore REIT Sector Analysis & Peer Review

Mapletree Industrial Trust: Strong Rental Reversions Offset by Occupancy Dip

Key Highlights:

• 1QFY3/26 DPU: 3.27 Scts, in line at 24.8% of FY26F forecast
• Robust rental reversions at +8.2% in 1Q
• Occupancy dipped slightly to 91.4%
• FY26-28F DPU estimates trimmed by 1.61–2.78% due to asset sales
• Target price revised to S\$2.49 with an Add rating and attractive 6.3% projected dividend yield for FY26F

Mapletree Industrial Trust (MINT) reported a steady performance for 1QFY3/26, delivering a slight year-on-year increase in revenue (+0.3%) and net property income (+0.8%) to S\$175.9m and S\$133.6m, respectively. The gains were driven by higher contributions from the Osaka data centre and positive lease renewals, partially offset by weaker performance in the US data centre portfolio. Distribution per unit (DPU) for the quarter stood at 3.27 Singapore cents, down 4.7% year-on-year, primarily due to lower joint venture contributions from higher interest expenses and the absence of divestment gains. Excluding divestment gains, DPU would have declined just 1.5% year-on-year.

Rental Reversions & Occupancy Overview

• Strong weighted average rental reversion: +8.2% across all Singapore segments
• Portfolio occupancy: dipped 0.2 percentage points quarter-on-quarter to 91.4%
• US portfolio occupancy: 88%, Singapore portfolio: 92.6% (slight declines driven by data centre and general industrial segments)
• Mapletree Hi-Tech @ Kallang Way improved to 63.7% committed occupancy
• 10.1% of leases (including 3.4% points from US data centres) expiring in FY26F; 1.8% points of these under lease discussions

Debt Profile and Asset Sales

• Gearing stable at 40.1% (end-1Q), expected to dip to 37% post completion of three Singapore asset sales (S\$535.5m) by 3Q25
• All-in funding cost: 3.1% in 1Q
• Interest coverage ratio: Healthy at 3.9x
• S\$597m of interest hedges expiring in FY26F; replacement could sustain higher funding costs
• Management maintains FY26F funding cost guidance at 3.0–3.1%

Strategic Initiatives & Portfolio Management

• Focus on tenant retention, e.g., lease extension at 8011 Villa Park Drive, Richmond
• Exploring opportunistic divestments, particularly in the US data centre portfolio, to rebalance assets

Financial Forecasts & Valuation

• FY26–28F DPU estimates cut by 1.61–2.78% due to income vacuum from recent and upcoming asset sales, partially offset by lower interest costs
• New DDM-based target price: S\$2.49 (previously S\$2.56)
• Add rating maintained, underpinned by resilient metrics and a projected 6.3% dividend yield for FY26F
• Potential catalysts: Stronger-than-expected rental reversions
• Key downside risks: Non-renewals at data centre lease expiries and global macroeconomic slowdown

Consensus & Ownership Snapshot

• Consensus ratings: 9 Buy, 5 Hold, 1 Sell
• Current price: S\$2.07; Target price: S\$2.49 (upside: 20.4%)
• Major shareholders: Temasek Holdings (27.1%), Schroders (5.3%), Vanguard (2.3%)

Financial Summary Table

Full Singapore REIT Sector Peer Comparison

The following is a comprehensive comparison of Singapore REITs across hospitality, industrial, office, retail, overseas-centric, and healthcare segments, highlighting market capitalization, leverage, price/NAV, and dividend yields:

ESG Performance: Mapletree Industrial Trust’s Sustainability Progress

ESG Ratings and Initiatives:

• LSEG ESG Combined Score: B (Environmental: B-, Social: B, Governance: B+)
• A+ for ESG controversies pillar
• GRESB Public Disclosure: A; MSCI ESG rating: BBB; Morningstar Sustainalytics: Low Risk
• Triple bottom-line approach: Focus on financial, social, and environmental considerations
• Key targets by FY30 (vs FY20 baseline):
• Reduce building electricity intensity by 15%
• Lower GHG emission intensity by 17%
• Increase solar energy capacity to 10,000 kWp
• FY3/24 achievements:
• 31% of AUM and 24% of NLA certified as sustainable buildings
• Certifications: BCA Green Mark Gold Awards, Water Efficient Buildings
• 0.75% YoY reduction in building electricity intensity
• 26.1% reduction in Scope 2 GHG emissions for Singapore assets
• 1.8m kWh annual energy savings from LED lighting upgrades
• 98.3% of employees received professional ESG training
• FY3/25 targets: 18% reduction in electricity intensity, 4,000 kWp boost in solar capacity, ISO 14001:2015 certification, new sustainable building certifications for US properties

However, community and environmental innovation scores remain at D+, presenting areas for further improvement. MINT ranks 52nd among Singapore companies for ESG and 18th among its sector peers. The broker notes that while no premium/discount is applied for ESG in fundamental valuations, enhanced ESG performance could attract more sustainability-focused funds.

Financial Performance and Key Ratios

Profit & Loss (S\$ million):

Key Ratios:

• Net Property Income Margin: ~75%
• Dividend Payout Ratio: ~99%
• Gross Interest Cover: Improving from 4.26x to 5.03x by FY28F
• Effective Tax Rate: Trending down to 5.4% by FY28F
• Occupancy: Expected to recover from 96.0% to 97.2% by FY28F

Conclusion: MINT Remains a Standout for Yield and Stability

Despite minor occupancy pressures and the impact of asset disposals, Mapletree Industrial Trust maintains a robust outlook with strong rental reversions, a healthy dividend yield, and a strategic approach to portfolio management. Its disciplined financials, proactive ESG initiatives, and diversified asset base position it as a resilient choice for yield-seeking investors. The Add rating is reaffirmed, with a revised target price of S\$2.49, representing a 20.4% upside from current levels. Ongoing asset management and sustainability enhancements could drive further upside, while global economic headwinds and data centre lease renewals remain key risks to monitor.