Analysts at OCBC Investment Research, Citi Research, CGS-CIMB Research and Maybank Securities are keeping their “buy”, “add” and “hold” calls on Mapletree Industrial Trust ME8U (MINT) following the release of its 3QFY2024 results ending December.
MINT achieved positive rental uplifts for its renewal leases for all reported business segments in Singapore in 3QFY2024, ranging between 4.1% and 10.5%. The average rental rate for its Singapore and North American portfolios rose 0.9% and 0.4% q-o-q respectively.
However, MINT’s portfolio occupancy slipped 0.6 percentage points q-o-q to 92.6 %, OCBC analysts highlight. Although its Osaka data centre remained fully occupied while its Singapore’s occupancy rose to 93.8%, this was offset by a dip in its US portfolio by 2.8 percentage points q-o-q to 89.9%.
“The decline was likely due to the return of space by AT&T, as evidenced from the decline in proportion of its gross rental income contribution from 5.1% as at Sept 30, 2023 to 2.6% as at December 31, 2023,” the analysts add. OCBC has lifted its fair value estimate to $2.69 from $2.59 previously on higher net property income estimates.
The trust’s management indicated that it is in talks with a potential replacement tenant at one of its US data centres, CGS-CIMB’s Lock Mun Yee and Natalie Ong point out. However, they note that the impact of contributions would likely be felt from the latter part of FY2025.
Currently, no significant tenants in the US have signalled the intention to leave. However, Vanguard (in Pennsylvania) is MINT’s next major lease expiry by end 2024, Citi’s Brandon Lee points out. The trust has also seen a slowdown in enquiries in 3QFY2024 due to the festive season, although demand remains for small spaces.
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While higher occupancy in hi-tech parks is encouraging, vacancy in US data centres and further non renewals along with absence of divestment gains next year will negatively impact distributions, in Maybank’s view. To this end, Analyst Krishna Guha has lowered his estimates for MINT, but raised his target price to $2.30 due to a lower discount rate.
Citi and CGS-CIMB have kept their target prices at $2.60 and $2.61 respectively.
As at 9.08am, units in MINT are trading 5 cent higher or 2.11% up at $2.41.
