Mapletree Industrial Trust (MINT) has announced a distribution per unit (DPU) of 3.49 cents for its 4QFY2021 ended March, bringing its full year dividend distribution to 13.8 cents.
This is 10% higher than the full year dividend paid out in FY2020, and unitholders can expect to receive their dividends on June 15.
In its earnings release, MINT says gross revenue and net property income for FY2021 increased 36.4% and 34.5% year-on-year to S$610.1 million and S$472.0 million respectively.
The increases were mainly driven by contributions from the acquisition of 29 data centres in the US, as well as 14 additional data centres in the US previously held under Mapletree Redwood Data Centre Trust.
Correspondingly, the amount available for distribution to Unitholders for FY2021 rose 18.8% year-on-year to S$350.9 million.
Tham Kuo Wei, CEO of MINT’s manager says that “data centre acquisitions in North America contribute meaningfully to DPU growth in FY2021 and have helped to enhance income stability.”
He adds that as of March 31, data centres accounted for 54.1% of MINT’s assets under management, pointing out that it represents an important and growing segment for MINT.
Tham says the REIT will “continue to reshape our portfolio towards higher value segments through strategic acquisitions and developments, while keeping a watchful eye on inflationary pressures.”
The average overall portfolio occupancy for MINT in 4QFY2021 increased to 94% from 93.6% in the preceding quarter, due to improved occupancy of its Singapore portfolio.
Average occupancy rates in Singapore increased to 94.4% in 4QFY2021, up from 93.7% the quarter before, as higher occupancies were registered for business park buildings and flatted factories.
In Singapore, MINT also completed the divestment of 19 Changi South Street on April 21 at a sale price of $13 million.
Overseas, the average occupancy rate for the North American portfolio remained unchanged at 93.3%.
Portfolio valuation
As at March 31, the total valuation of 143 properties in MIT’s portfolio was S$8.7 billion, up 28.9% from the FY2020 figure of $6.7 billion.
The REIT’s 86 Singapore properties made up $4.3 billion, while those in North America comprised 57 data centers worth US$3.2 billion. Net asset value per unit increased to $1.86 from 1.66 over the same period.
Debt
Separately, MINT also revealed that its weighted average cost of capital (WACC) for 4QFY2021 increased marginally to 2.4% compared to 2.3% for the previous quarter.
However, it adds that about 70.5% of its gross borrowings of $2.9 billion had been hedged through interest rate swaps and fixed rate borrowings, which will mitigate the impact of interest rate fluctuations on distributions.
MINT’s aggregate leverage decreased to 38.4% as at 31 March 2022 from 39.9% as at 31 December 2021, due mainly to the repayment of loans as well as the recognition of revaluation gain on investment properties.
Moving forward, MINT’s view is that the global economy entered 2022 in a “weaker position”, with global growth expected to moderate from 5.9% in 2021 to 4.4% in 2022 .
The REIT notes that rising energy prices and supply disruptions have resulted in higher and more broad-based inflation.
However, assuming medium-term inflation expectations remain well-anchored, inflation should gradually decrease as supply-demand imbalances wane in 2022 and monetary policy in major economies responds.
It points at the US Federal Reserve’s interest rate hikes, as well as the Monetary Authority of Singapore’s moves to alleviate inflation pressure.
Citing the Singapore Commercial Credit Bureau’s Business Optimism Index, MINT notes that optimism dipped slightly in the second quarter of 2022 amid global uncertainties, including geopolitical tensions and continued supply chain disruptions.
However, growth prospects for domestically-oriented sectors remain strong with the progressive easing of safe management measures and travel restrictions.
For the US, according to commercial real estate services and investment firm CBRE, rental rates held steady in the second half of 2021.
Compared with 2020, average asking rental rates in primary data centre markets in North America dipped 0.4% in 2021, with rental rates in secondary markets dipping 2%.
“As demand grows in power-constrained markets like Silicon Valley and Northern Virginia, inventory bottlenecks are likely to result in rental rate increases. MINT’s large and diversified tenant base with low dependence on any single tenant or trade sector will continue to underpin its portfolio resilience,” MINT says.
Units of MINT closed at $2.63, down three cents or 1.13% lower than its previous close.