Strong 4Q22, Lowering DPUs Forecast

• Mapletree Industrial Trust (SGX:ME8U) delivered a strong 4Q22, as DPU rose ~6% y-o-y, driven by rising US data centre contributions, now at ~51% of AUM. FY22 DPU of 13.80cts, at +10% y-o-y, was ahead of consensus and our estimates.
• Recovering industrial rents and improving DPU visibility from higher data centre tenancies suggest sound fundamentals.
• Growth headwinds from inflationary pressures and rising interest rates are partly offset by retained capital distributions, and a strong balance sheet.

Singapore Recovery in Sight, With Costs Rising

• Mapletree Industrial Trust's portfolio occupancy increased to 94.0% in 4Q22 (from 93.6% in 3Q22), with better occupancy in Singapore (from 93.7% to 94.4%), driven by flatted factories (92.0% to 93.3%), and business park buildings (83.0% to 83.3%).
• Gross rents at S$2.13 psfpm were flat q-o-q and +3.9% y-o-y (vs +0.9% y-o-y in 3Q22), while rental reversion remained positive at +1.1% (vs +1.0%).
• Mapletree Industrial Trust’s electricity hedges for its multi-tenanted properties are falling off at end-May 2022, and management estimates 2-3% downside to its NPI with costs expected to escalate at 2-3x.

Stable Occupancy, Rents for US Data Centres

• US occupancy was stable at 93.3%, while its WALE remains the three assets (in San Diego, Milwaukee and Tennessee).

Strong Balance Sheet, DPUs Cushioned by Rising Rates

• Mapletree Industrial Trust's AUM rose ~29% y-o-y to S$8.8b with the addition of 29 US data deal opportunities supported by a S$1.7b debt headroom (at 45% limit).
• Source: Maybank Research - 27 Apr 2022