Mapletree Industrial Trust Delivers 2Q & 1H FY25/26 Results: Strategic Moves and Market Headwinds in Focus

Key Highlights

• Net property income (NPI) for 2QFY25/26 declined 7.8% year-on-year to S\$124.0 million.
• Distribution per Unit (DPU) for 2QFY25/26 dropped 5.6% year-on-year to 3.18 cents.
• Completion of significant portfolio divestments in Singapore, unlocking value and strengthening capital position.
• Aggregate leverage ratio improved to 37.3% post-divestment.
• Active capital and risk management: 92.9% of debt hedged/fixed, 86.1% of distributable income hedged/derived in SGD.
• Continued strategic focus on data centres and hi-tech business space as key growth engines.

Detailed Financial Performance

Quarterly Overview (2QFY25/26 vs 2QFY24/25)

• Gross revenue fell 6.2% to S\$170.2 million, reflecting the absence of a divestment gain, the impact of property divestments in Singapore, and foreign exchange headwinds from a weaker USD.
• NPI declined 7.8% to S\$124.0 million.
• Distribution to unitholders decreased 5.3% to S\$90.7 million.
• DPU excluding divestment gain was down 2.2% to 3.18 cents.
• Borrowing costs dropped 20.0% to S\$21.7 million, due to repayment from divestment proceeds and lower interest rates.
• Cash distributions from joint ventures fell 25.2%, impacted by higher borrowing costs and lease pre-terminations in prior periods.

Half-Year Overview (1HFY25/26 vs 1HFY24/25)

• Gross revenue decreased by 3.0% to S\$346.1 million.
• NPI dropped 3.5% to S\$257.7 million.
• DPU for the half-year fell 5.1% to 6.45 cents.
• Distribution to unitholders declined 4.7% to S\$184.0 million.
• Borrowing costs reduced by 13.3% to S\$46.2 million.

Portfolio Update and Strategic Developments

• MIT completed the divestment of three industrial properties in Singapore for S\$535.3 million, unlocking value at a 22.1% premium over original investment cost.
• The Georgia Data Centre in the US was sold at an 18.6% premium over market valuation for US\$11.8 million.
• Proceeds were used to repay borrowings, resulting in an improved aggregate leverage ratio of 37.3%.
• The trust remains focused on high-growth data centres (58.3% of AUM) and hi-tech business space, with a diversified portfolio of 136 properties across Singapore, North America, and Japan.
• Active portfolio rejuvenation continues, with a three-pronged approach to manage North American vacancies: reletting, repositioning, and rebalancing.
• Targeting S\$500–S\$600 million of divestments over the next two financial years to further enhance flexibility and redeploy capital into growth markets and assets.

Operational Metrics and Tenant Mix

• Overall portfolio occupancy stood at 91.3% as of 30 September 2025, with Singapore at 92.6%, North America at 87.8%, and Japan at 100%.
• Weighted average lease expiry (WALE) for the overall portfolio increased to 4.6 years, with North America at 6.2 years, Singapore at 2.8 years, and Japan at 14.2 years.
• About 74.2% of the data centre portfolio is on triple-net leases, reducing cost exposure to MIT.
• Diversified tenant base of over 2,000 tenants, with the largest contributing only 6.6% of gross rental income; top 10 tenants account for 30.7%.
• No single trade sector accounts for more than 16% of portfolio gross rental income, reducing sector-specific risk.

Capital and Risk Management

• Strong balance sheet with net asset value per unit at S\$1.69.
• Interest coverage ratio remains robust at 3.9x.
• Debt maturity well-distributed with a weighted average tenor of 3.0 years; no more than 24% of debt maturing in any single year.
• Foreign exchange and interest rate risks managed actively: 92.9% of debt hedged or fixed, 86.1% of distribution hedged/derived in SGD.
• Potential for higher borrowing costs as S\$600 million of interest rate hedges are set to expire in each of FY25/26 and FY26/27; this could pressure future distributions.

Market and Outlook

• The Singapore industrial property market remains stable, with multi-user factory and business park rents holding steady. Total supply for 2025 is modest, limiting oversupply risk.
• The North American data centre market continues to expand rapidly, driven by AI and cloud computing demand. Despite record supply additions, vacancy rates have dropped to 1.6%, and most new capacity is pre-leased.
• Japan, particularly Tokyo and Osaka, remains a key growth market for data centres, although power and land supply constraints are notable challenges.
• Macroeconomic headwinds such as slowing global growth, persistent inflation, and rising borrowing costs remain risks for the trust. The manager will focus on active lease management, prudent capital allocation, and selective divestments to maintain resilience and capture growth opportunities.

ESG and Sustainability Initiatives

• MIT achieved WELL Health-Safety Ratings for three North American properties and received the 2025 Green Lease Leader (Silver) recognition for its US data centre portfolio.
• Long-term sustainability targets include a 15% reduction in average building electricity intensity and a 17% reduction in Scope 2 GHG emissions intensity (from FY19/20 base), as well as a 10,000 kWp solar energy capacity goal by FY29/30.

Potential Price-Sensitive Factors

• Significant portfolio divestments and capital recycling have improved leverage and unlocked value, but also contributed to a short-term drop in NPI and DPU. These moves may impact investor sentiment, especially as the trust actively targets further divestments.
• Exposure to foreign exchange risk and rising borrowing costs (due to expiring interest rate hedges) could continue to weigh on future distributions and share price.
• The trust’s heavy focus on data centres positions it well for structural growth, but any negative surprises in the high-growth North American market or further tenant non-renewals could quickly affect earnings.

Conclusion

Mapletree Industrial Trust is actively managing its portfolio to enhance resilience and capture secular growth in data centres and hi-tech business space, supported by a strong sponsor and diversified tenant base. However, shareholders should closely monitor the impact of ongoing divestments, rising borrowing costs, and currency volatility on distributions and overall performance. The trust’s proactive risk management and capital recycling strategy provide a buffer, but market headwinds and operational challenges in North America and Japan remain key variables for the share price outlook.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation. Investors should conduct their own due diligence and consult with professional advisors before making investment decisions. The information herein is based on data available as of November 2025 and may be subject to change.

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