Analysts are remaining positive on Mapletree Industrial Trust (MINT) after the REIT reported a higher distribution per unit (DPU) of 3.41 cents for the 3QFY2025 ended Dec 31, 2024, up 1.5% y-o-y and 1.2% q-o-q.
Gross revenue for the quarter rose by 2% y-o-y to $177.3 million due to contributions from the freehold mixed-use facility in Tokyo. The higher revenue was also due to the REIT completing the second and third phases of the fitting out works of a data centre in Osaka.
9MFY2024 DPU increased by 1.4% y-o-y to 10.21 cents.
The REIT’s 3QFY2024 DPU met the expectations of the analysts at CGS International, Morningstar Research, OCBC Investment Research (OIR) and UOB Kay Hian while it came in slightly above Citi Research’s expectations. To DBS Group Research, MINT’s 9MFY2024 DPU also stood slightly above the team’s estimates.
CGSI hails healthy rental reversions
CGSI analyst Lock Mun Yee kept her “add” call and target price of $2.82 on MINT as she likes the REIT’s “resilient” metrics and attractive dividend yield of 6.3% for FY2025.
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In her Jan 23 note, Lock notes MINT’s positive rental reversions of 9.8% during the quarter, although its overall portfolio occupancy fell by 0.8 percentage points q-o-q to 92.1% due to lower occupancy in the high-tech, light industrial and stack up/ramp-up segments as well as its US portfolios.
“While negotiations are ongoing, any delays or non-renewals could result in some frictional vacancy within its portfolio. That said, we believe, given the supply outlook in Singapore and key data centre (DC) hubs in the US, the majority of these leases would likely be largely re-contracted,” says Lock.
Citi likes MINT for ‘sizeable exposure’ to data centres
Citi analyst Brandon Lee kept his “buy” call and target price of $2.65 on MINT as he likes the REIT’s “sizeable” exposure to data centres and its “relatively” high FY2026 yield of 6.2%. While MINT has slightly underperformed the wider Singapore REITs (S-REITs) sector year-to-date (ytd), any positive outcome on its ongoing power study on its US data centre portfolio as well as any pick up in asset divestments are key catalysts.
In his Jan 22 report, Lee liked MINT’s Singapore portfolio, which saw positive rent reversions, while he flagged the lower q-o-q occupancy as a negative.
In a separate report dated Jan 23, Lee said that the REIT manager is seeing “softness” in the high-tech market due to additional supply. Management also cited some major lease expiries in FY2026 including ST Telemedia at STT Tai Seng in Singapore, two tenants at one of its hyperscaler facilities in the US; InComm at 250 Williams Street in Atlanta; Centresquare in San Jose; and “small expiries” in 2775 Northwoods Parkway in Atlanta. Of these, Lee suggests that part of the income loss for STT Tai Seng could be mitigated by ST Telemedia potentially taking up additional space.
MINT also indicated that it was open to selling the asset if ST Telemedia was keen on buying the property. MINT does not see issues in renewal for its hyperscaler facilities in the US, but it expects to see a non-renewal for large part of the Williams Street property in Atlanta. Meanwhile, MINT has “nothing conclusive” for its San Jose space and its Northwoods Property in Atlanta.
Further to his report, Lee adds MINT is still looking to acquire properties but is mindful of capital markets and interest rates.
“Aside from US, MINT is looking at Europe, Asia (mature markets like Japan and South Korea) and Australia (but a bit tough due to yield spread not there). Japan remains an interesting market as it gives good yield spread, albeit limited amount of rent escalations,” Lee writes.
With that in mind, the analyst believes any potential acquisitions would require a mix of proceeds from divestments as well as debt and, or equities. Any potential acquisitions would mean MINT’s gearing to hover around 39% - 40% in the near-term after factoring in remaining fit-out works at the Osaka data centre and a 40% - 50% take-up for any distribution reinvestment plan (DRP) with no significant valuation change in FY2025.
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DBS likes ‘stable DPU’ and ‘attractive returns’
The DBS team likes MINT’s “stable” 9MFY2024 DPU, which stood at 77% of its estimates, implying a “good chance” that the REIT will surpass expectations for the full year. The team has kept its “buy” call on MINT and target price of $2.60.
“The strong performance was mainly due to continued stable operational performance, strong capital management, keeping cost of debt stable at 3.1% (-0.1% q-o-q),” the team notes.
MINT’s 9MFY2025 revenue and net property income (NPI), which stood at $534 million and $400.3 million respectively, also came in line with the team’s expectations. The higher performance was due to higher rentals, new income from acquisitions, but offset by the loss of income from the divestment of the Tanglin Halt cluster, lower occupancy rates in the US and higher operational expenses.
In the team’s view, MINT’s continued “solid” DPU will be positive for investors. As such, it believes investors should remain invested in MINT with its diversified exposures in Singapore, the US and Japan, as well as for its pivot to the growing data centre subsector, which is on a “firm” upward growth trend.
“Overall, we believe that valuations remain inexpensive at 1.3 times P/B and a FY2025 – FY2026 yield of 6.0%, slightly higher than historical averages,” the team writes.
Maybank tweaks DPU estimates after factoring lower borrowing costs, lower JV distributions
Maybank Securities analyst Krishna Guha has kept his “buy” call and target price of $2.60 on MINT after the REIT’s “stable” 3QFY2025 performance.
“Growth was supported by the recent acquisition in Tokyo. Operational performance was resilient led by high single-digit positive rental reversions in Singapore. Flatted factories saw occupancy inch up further while other segments saw some lease non-renewals,” says Guha, who just took on coverage of the REIT. “Gearing edged up while debt cost fell”.
The analyst has, however, upped his DPU estimates by 0.2% for FY2025 after factoring in lower borrowing costs. He has also lowered his FY2026 DPU estimates by 0.5% after factoring in lower distributions from MINT’s joint venture (JV).
Morningstar thinks MINT is ‘fairly valued’
Morningstar’s analyst Xavier Lee has kept his “three star” rating on MINT and target price of $2.30.
While the analyst likes the REIT’s data centres, seeing benefit from strong secular demand, he believes it is currently fairly valued.
“In our view, the recent announcement of a US$500 billion ($673.43 billion) investment into artificial intelligence (AI) infrastructure projects in the US is a strong signal of intent by the US government to boost its AI development,” Lee writes.
With the REIT’s exposure to data centres, the trust could benefit from the strong investment flow and interest in this sector.
However, part of the sum could be used to increase the supply of data centres in the US, which is likely to compete with MINT’s older data centres in the medium term, he adds.
OIR lowers target price to $2.71 after ‘mixed quarter’
OIR’s research team has lowered its target price to $2.71 from $2.77 as it increases its risk-free rate assumption by 25 basis points (bps) to 2.75%.
“Based on MINT’s sensitivity analysis, a 10% decrease in ebitda and 100bps increase in interest rate is expected to reduce its adjusted interest coverage ratio from 4.3 times to 3.9 times and 3.2 times, respectively,” the team writes.
Despite MINT’s “mixed quarter” with robust reversions but lower portfolio occupancy, the OIR team has maintained its “buy” call as MINT offers investors a “proxy to the fast-growing digitalisation and data outsourcing trends”.
The team also expects management to continue to shift its portfolio mix towards more data centres as compared to old economy industrial assets.
“Although the macroeconomic outlook remains uncertain, MINT’s solid financial position, high quality management team and strategy of scaling up its data centre and high-tech exposure would allow it to better withstand the uncertainties ahead, in our view,” it writes.
UOB Kay Hian also lowers target price to $2.89
Finally, UOB Kay Hian analyst Jonathan Koh has kept his “buy” call on MINT but with a lowered target price of $2.89 from $3.05.
Like his peers at OIR, Koh has increased his assumption for risk-free rate from 2.75% to 3% from the elevated Singapore government yield. His target price is based on a cost of equity of 7% from 6.75% previously and a terminal growth of 2.2%.
In his report, Koh sees catalysts including growth from data centres in Singapore, Japan and the US, as well as the acquisition of the remaining 50% stake in the portfolio of the 13 data centres from the REIT’s sponsor, Mapletree Investments. Redeveloping flatted factories into high-tech industrial parks in Singapore is the final catalyst noted.
Units in MINT closed 1 cent lower or 0.45% down at $2.20 on Jan 24.
