Mapletree Industrial Trust - Is it struggling to fill space Credit Suisse vacated at 'The Signature'?
5/11/2013 – Mapletree Industrial Trust (MIT) completed the customised development of corporate headquarters for Kulicke & Soffa at Serangoon North Avenue 5 on October 4.
Kulicke & Soffa will occupy 69% of the net lettable area for 10 years, with the option to renew for two more 10-year terms.
The remaining space would be leased out to multiple users.
MIT just announced earnings for Q2 FY14:
Gross Revenue: +7.6% to S$73.4 mln
Net Property Income: +11.6% to S$54 mln
Cash flow from operations: S$50.7 mln vs S$45.6 mln
DPU: 2.47 cents per unit vs 2.29 cents per unit
Analysts Pang Ti Wee and Donald Chua at CIMB find Q2 results in-line with their estimates.
MIT's DPU in the first half of FY14 makes 54% of CIMB's full-year DPU estimate.
Therefore, CIMB has raised its DPU estimates for FY15 and FY16 in the anticipation of a better rental reversion.
The broker also points out the Trust's mandate to invest in industrial properties only within Singapore expires this month.
So, MIT can now acquire foreign industrial properties.
CIMB suggests Iskandar (Malaysia) could be a 'natural choice' for the REIT.
CIMB maintains a NEUTRAL rating on the Trust with a revised target price of S$1.48 compared to S$1.41 previously.
Investor Central. Asian insights for global investors. We ask the tough questions of Asian companies which global investors need answers to.
1. Is it struggling to fill vacant space at 'The Signature'?
According to slide 15 of its Q2 earnings presentation, MIT's portfolio occupancy slipped to 93.9% in Q2 from 95.5% in Q1.
Its average passing rent was marginally lower at S$1.70 psf/month, from S$1.71 psf/month in the previous quarter.
MIT's portfolio occupancy was lower due to a drop in occupancy rates at its 'business park buildings' and 'Hi-tech buildings' (refer slide 16).
The passing rent at its 'business park buildings' dropped to S$3.70 psf/month in Q2, from S$3.97 psf/month in Q1 (refer slide 17 of Q2 earnings presentation and Q1 earnings presentation).
In fact, the new leases in Q2 were signed at S$3.68 psf/month which was sharply lower than S$3.89 psf/month in Q1.
Overall, the Trust's tenant retention rate slipped to 64.4% from 84.1% a quarter earlier (refer slide 18 of Q1 and Q2 presentations).
Analysts Pang Ti Wee and Donald Chua at CIMB reveal a temporary dip at 'The Signature' as Credit Suisse vacated the leasehold space.
'The Signature' is a nine-storey building at Changi Business Park.
Therefore, it seems that the drop in performance indicators of the Trust's 'business park buildings' is largely due to the trouble at 'The Signature'.
That makes us curious about the developments at 'The Signature'.
Is the Trust struggling to fill the vacant space?
Why couldn't it retain Credit Suisse?
And why did the passing rent for new leases at 'business park buildings' drop sharply in Q2?
2. Has it short-listed foreign acquisition targets?
The Trust's mandate to invest purely within Singapore expires in October.
Therefore, has it short-listed the targets overseas?
CIMB suggests Iskandar region could be of interest for the Trust.
3. What happened to the upfront land premium it paid to JTC in Q4 last year?
We have sent these questions to the Trust (firstname.lastname@example.org) to invite them for an on-camera interview, and/or seek their written response.
Sofar, we have not had a reply (which is why you are seeing this message).
While our purpose is to ask the questions which the man on the street would ask, and to help the everyday investor make informed investments, please note that:
Our articles and presentations ('our contents') are not investment advice nor should they be construed as investment advice or any recommendation of any kind; nor meant to cast allegations or insinuations of any kind against any individuals or entities. Before acting on the material in our contents, you should either seek independent advice tailored to your particular circumstances and intentions or rely on your own judgement.
Our articles and presentations express our observations, opinions and theoretical analysis based on the facts that we have gathered or have been provided to us. While we endeavour to ensure that our contents are accurate and are presented in good faith, we cannot and do not warrant the accuracy, adequacy or completeness of the material or that the material is suitable for its intended use; and we disclaim any such warranties express or implied that may be presumed by any party; neither do we take responsibility for the views of companies or other stakeholders or observers or sources quoted or hyperlinked in our contents. While every precaution has been taken in the preparation of our contents, we (and our principals) shall not be liable for any losses or damage or inconveniences due allegedly to errors or omissions in any facts or due allegedly to reliance on our contents in any way whatsoever; nor for any damage to any computer hardware, date information or materials allegedly caused by our contents.
All expressions of opinion and observations in our contents are subject to change without notice and we do not undertake a duty to update and supplement our contents or the information contained herein in the event we obtain any further or more complete information.
©2013 Investor Central® - a service of Hong Bao Media