Bond Articles


Mapletree Industrial Trust: Credit Commentary

Timothy Ang  |   04 May 2021  |    205 views

Mapletree Industrial Trust (MIT) is a real estate investment trust listed on the main-board of the SGX. It owns a portfolio of industrial and data centre assets including Data Centres, Hi-Tech Buildings, Business Park Buildings, Flatted Factories, Stack-up/Ramp-up Buildings and Light Industrial Buildings. As at 31 March 2021, the trust’s assets under management was S$6.8bn, comprising 87 properties in Singapore and 28 properties in North America (including 13 date centres). MIT is sponsored by Mapletree Investments Pte. Ltd. and is 29% owned by Temasek Holdings.

Credit metrics as at 31 March 2021

  • Aggregate leverage ratio: 40.3% 
  • Interest coverage ratio (trailing 12 months): 6.4x
  • Committed credit facilities: S$600mn
  • Credit rating: BBB+ stable outlook by Fitch

Properties by assets under management:

  • Data centres: 41.2% (Singapore 6.2%, North America 35.0%)
  • Flatted factories: 21.7%
  • Hi-tech buildings: 20.4%
  • Business park buildings: 8.5%
  • Stake-up/ramp-up buildings: 7.2%
  • Light industrial buildings: 1.0%

Portfolio value and occupancy by geography:

  • Singapore: 65%, occupancy 92.2%
  • North America: 35%, occupancy 97.6%

Commentary

+ Large and diversified tenant base. By gross rental income: HP 7.5%, AT&T 6.6%, Equinix 3.9%, ST Telemedia 2.3%, Vanguard 1.5%. Lease expiry profile well staggered, highest in next 5-years is 24.4% of gross rental income expiring in 2023.

+ Strong balance sheet. Rated BBB+ investment grade by Fitch. 37.3% aggregate leverage ratio with 100% of loans unsecured. S$600mn credit facilities able to cover highest debt maturity tower within 5 years of S$560mn in 2022. Interest cover 7.2x for the trailing 12 months.

+ Resilient outlook for data centres. Driven by 5G and digitalisation trends. MIT has the right of first refusal from sponsor Mapletree Investments for the acquisition of more data centres, including 50% of JV Mapletree Rosewood Data Centre Trust in US. MIT is also seeking data centre acquisitions from 3rd party vendors. The trust targets 2/3 AUM to be data centres in 5 years.

Bond valuations

There are six Mapletree Industrial Trust bonds:

  1. MINTSP 3.65% 7Sep2022 Corp (SGD)
  2. MINTSP 3.02% 11May2023 Corp (SGD)
  3. MINTSP 3.16% 28Mar2024 Corp (SGD)
  4. MINTSP 3.79% 2Mar2026 Corp (SGD)
  5. MINTSP 3.58% 26Mar2029 Corp (SGD)
  6. MINTSP 3.15% NC11May2026 Perpetual Corp (SGD)

Currently, on 3 May 2021, the only Mapletree Industrial Trust bond with liquidity is MINTSP 3.58% 26Mar2029 Corp (SGD). The senior unsecured bond trades at a yield to maturity of 2.18% with an ask price of 110.10. However, we prefer its peer bond, the MAPLSP 3.58% 13Mar2029 Corp (SGD), issued by Mapletree Treasury Services Ltd and guaranteed by Mapletree Investments Pte Ltd. This bond trades at a higher yield to maturity of 2.24% and a lower ask price of 109.55, which is more attractive considering both bonds have similar maturity date. 

Figure 1: We prefer the MAPLSP 3.58% 13Mar2029 (SGD) bond in the Mapletree curve.Mapletree Industrial Trust Bond Valuation

 

Source: Bloomberg, POEMS

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