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MIT's DPU down 7.4% for Q1; S$7.1m withheld due to virus uncertainty

MAPLETREE Industrial Trust's (MIT) distribution per unit (DPU) stood at 2.87 Singapore cents for the first quarter ended June 30, down from 3.1 cents a year ago.

This is despite distributable income rising 11.6 per cent to S$70.6 million on the back of higher net property income and distributions declared by joint ventures, partially offset by higher manager’s management fees.

In view of the uncertainty from the Covid-19 pandemic, tax-exempt income (distributions relating to joint ventures) amounting to S$7.1 million, equivalent to DPU of 0.32 Singapore cent, will be withheld. The group said this will provide it with greater flexibility to mitigate the impact of mandated rental reliefs for tenants.

MIT had also withheld tax-exempt income amounting to S$6.6 million in Q4 FY 2020 for the same reason. Had the tax-exempt income distributions been included for Q1 2021, the DPU would have been 3.19 Singapore cents.

The manager estimated that the rental reliefs extended to tenants would amount to about S$20 million, which will affect MIT’s distributable income for FY2021.

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Net property income grew 0.9 per cent to S$78.7 million from a year ago. Gross revenue fell 0.5 per cent to S$99.1 million partly due to the rental rebates extended to tenants as part of the Covid-19 Assistance and Relief Programme.

Property operating expenses decreased 5.6 per cent to S$20.5 million. This was mainly due to lower property maintenance expenses, utilities, and marketing commission, which were partially offset by higher property tax and allowance for doubtful debts.

Share of joint ventures results surged to S$13.7 million from S$4.3 million due to the contribution from Mapletree Rosewood Data Centre Trust, a 50:50 joint venture between MIT and Mapletree Investments Pte Ltd. Mapletree Rosewood Data Centre Trust holds 10 powered shell data centres and an 80 per cent interest in three fully fitted hyperscale data centres in North America.

Average portfolio occupancy for Q1 decreased to 91.1 per cent from 91.5 per cent in the preceding quarter. All property segments recorded lower average occupancy rates. 

The average rental rate of the Singapore portfolio fell to S$2.08 per square foot per month (psf/month) in Q1 FY2021 from S$2.11 psf/mth in Q4 FY2020. All property segments except the data centres in Singapore and light industrial buildings registered lower average rental rates due mainly to rental rebates.

During the quarter, MIT raised S$410 million through a private placement that was about 8.2 times covered at the top end of the issue price range of S$2.80 per new unit. Gross proceeds from the private placement and acquisition fees in units will be used to fully fund the proposed acquisition of the remaining 60 per cent interest in the 14 data centres in the US at a purchase consideration of US$210.9 million.

Following the proposed acquisition, MIT’s data centre segment will comprise 39 per cent of MIT’s portfolio by assets under management.

As at June 30, the Reit’s aggregate leverage ratio was 38.8 per cent, slightly higher than 37.6 per cent as at March 31, 2020.

The manager said MIT’s large and diversified tenant base with low dependence on any single tenant or trade sector will continue to underpin its portfolio resilience. It added that the long leases in MIT’s data centres in Singapore and North America, as well as build-to-suit projects, will further strengthen the portfolio’s resilience.

A cumulative distribution of 2.9 Singapore cents per unit for the period of April 1, 2020 to July 1, 2020 will be paid on or around July 28. The cumulative distribution includes an advanced distribution for July 1 (the date immediately prior to the issuance of the new units in the private placement) of 0.03 cent per unit.

The counter closed at S$2.97 on Tuesday, up S$0.02 or 0.68 per cent, before results were out.

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