RPT-Fitch affirms Mapletree Industrial Trust at 'BBB+'; outlook stable
(Repeat for additional subscribers)
Sept 2 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has affirmed Singapore-based Mapletree Industrial Trust's (MIT) Long-Term Issuer Default (IDR) and senior unsecured ratings at 'BBB+'. The Outlook on the IDR is Stable.
MIT's ratings implicitly reflect its strong sponsor, Mapletree Investments Pte Ltd (MIPL), a wholly-owned indirect subsidiary of Singapore's sovereign wealth fund, Temasek Holdings (Private) Limited together with the systemic support for Singapore property. MIT is a Real Estate Investment Trust comprising industrial properties. It has a granular property portfolio with strong locational advantage and a staggered lease maturity profile. MIT's ratings are constrained by its high financial leverage as measured by its funds from operations (FFO)-adjusted net leverage, geographic concentration in Singapore and small scale when compared to global property investment companies. MIT's Outlook reflects the stable outlook for its property portfolio.
KEY RATING DRIVERS
Strong Sponsor: MIT, by virtue of being a Mapletree group company, has been able to secure competitively priced debt funding and strategically located investment properties. MIPL generated revenues of SGD686.3m in FY13 (FY12: SGD574.4m) and EBITDA of SGD392.2m (FY12: SGD278.4m) on assets of SGD10.8bn (FY12: 12.2bn). Granular portfolio, locational advantage: MIT's portfolio is spread across several subcategories in the industrial space, such as flatted factories, stack-up / ramp-up buildings, light industrial buildings, high-tech buildings and business park buildings. The properties are located in strategic locations that enjoy close proximity to major expressways and the mass rapid transit system - which are easily accessible by the labour force. Over 2,000 tenants from 25 industries occupy MIT's properties. The single largest tenant accounted for 4.3% of MIT's Q114 gross rental income. The diversified tenant profile exposes MIT to a low level of tenant and industry concentration risks.
Favourable portfolio metrics: MIT's portfolio is characterized by high occupancy rates in excess of 95%, a portfolio retention rate of 84% with 47.3% of its tenants having leased MIT's properties for more than four years and a staggered lease maturity profile with a portfolio weighted average lease expiry of two and a half years
Moderate refinancing and low interest rate risks: Contractual debt maturities for FY14 and FY15 are SGD206m and SGD344m respectively. MIT is currently in discussion with multiple banks to avail term loan and revolving credit facilities to refinance debt maturing in September 2013 and funding FY14 capex. As of 30 June 2013, approximately 83% of MIT's debt constitutes fixed rate debt. This, coupled with a staggered debt maturity profile, protects MIT from the risk of rising interest costs in the next 12 to 18 months.
High financial leverage: MIT's FFO-adjusted net leverage is high at 5.80x as of 31 March 2013 (31 March 2012: 6.80x). However, its loan to value ratio, representing its balance sheet leverage, at 35.8% as of 30 June 2013, is within the regulatory ceiling of 60% and in line with the Singapore REIT sector. As real estate constitutes a key economic activity for Singapore accounting for almost 18% of Singapore's non-financial corporate assets in 2010, Fitch believes that this provides systemic support for the industry and therefore mitigates MIT's high leverage.
Stable outlook despite rising supply: Approximately, 4.5 million square feet and 7.5 million square feet of new factory space is projected to enter the Singapore industrial market in 2013 and 2014 respectively. This is unlikely to adversely impact MIT's credit profile as its passing rents are lower than the prevailing median market rent and the REIT enjoys a strong locational advantage.
Negative: Future developments that may, individually or collectively, lead to negative rating action include
- FFO-adjusted net leverage remaining above 6.0x on a sustained basis, and
- FFO fixed charge cover falling below 5.0x on a sustained basis (FY13: 6.60x)
Positive: No positive rating action is expected in the medium term given MIT's high financial leverage, geographic concentration in Singapore and small scale in relation to global property investment companies.
- Colorado baker discriminated by denying gay couple wedding cake: judge
- Amish girl in Ohio will not be forced to resume chemo for cancer
- Flights delayed as air pollution hits record in Shanghai
- WTO overcomes last minute hitch to reach its first global trade deal
- French launch Central African Republic mission but deaths mount