Mapletree Industrial Trust

For Q2 FY25/26, MIT said net property income declined year over year, mainly from the loss of income after divesting three Singapore industrial properties, lower North America contributions from lease non-renewals and a weaker U.S. dollar, partly offset by acquisitions and completion of final fit-out works. Distribution to unitholders fell 5.3% to $90.7 million, while distribution per unit increased 5.6% to $0.0318; management noted that excluding the prior-year $3.3 million divestment gain from Tanglin Halt, DPU would have been down 2.2%. On a quarter-on-quarter basis, DPU was down 2.8% to $0.0318. Borrowing costs were lower, total borrowings fell to $3.1 billion, leverage eased to 37.3%, and the interest-rate hedge ratio increased to close to 93%. Management guided FY25/26 borrowing costs at 3.1% to 3.2% and FY26/27 at 3.3% to 3.4%; it also said 53% of USD income is hedged for the next 12 months at an average rate of about 1.28 to 1.29.

The CEO emphasized operational stability despite a softer U.S. office/data center backdrop, pointing to flat overall occupancy, better committed occupancy at Kallang Way at 64.4%, and a steady flow of renewals and new leases. She said the team has already executed about 184,000 square feet of North America leasing, with some of that backfilling vacant units, and described the lease coverage as forward-looking because many of the new leases start in FY26/27. Her tone was cautiously constructive: Singapore remains the home market, but opportunities there are limited because of power allocation constraints and short land tenures, so the team is focused on recycling capital and widening the acquisition pipeline in Europe, Asia, Japan, and potentially the sponsor asset.

The CFO focused on capital structure, hedging, and interest expense. She said total borrowings are $3.1 billion, leverage is 37.3%, the hedge ratio is close to 93%, and average borrowing cost for the quarter was 3%; she also said about $600 million of IRS is due or coming due this year and next, which is expected to pressure borrowing costs. For FY25/26, she guided borrowing cost at 3.1% to 3.2%, and for FY26/27 at 3.3% to 3.4%, assuming replacement of the maturing swaps at current market levels rather than factoring in future rate cuts. She also said 86% of the next 12 months’ distributable income is hedged or naturally in Singapore dollars, and about 53% of USD income is hedged for the next 12 months.

Analysts pressed on backfilling at 250 Williams, AT&T, and San Jose, and management said 250 Williams is seeing inquiries and gradual office-space leasing, while AT&T still has no clarity on whether it will extend. For San Jose, management said the power study is complete, the facility can currently take up to 7 MW, and expanding to 20 MW would require significant capex and time, so they are also considering leasing out, repurposing, or divesting the asset. Questions also focused on the sponsor’s 50% portfolio, where management said occupancy is above 90% and the valuation is around SGD 1 billion, with about 60% hyperscaler exposure and cap rates around 5.5% to 6%. Analysts additionally asked about the dividend/divestment plan and debt hedging; management said the $500 million to $600 million North America divestment is likely to take 1-2 years, and the hedge ratio should move back toward about 80% by year-end as IRS roll off.