Here’s why Mapletree Industrial Trust isn’t down for the count just yet

DPUs will pick up in FY18-19, for starters.

Patience will pay off for Mapletree Industrial Trust (MIT)’s investors, according to analysts.

Maybank Kim Eng (Maybank KE) reports that falling short of accelerating average occupancies appreciably, FY3/17 will likely be a flat year for MIT. However, demand-supply conditions are just as unfavourable, if not worse, than last year. 

Sequentially, things have been sluggish for MIT. Q4 occupancy was stable at 94.6%, compared to the preceding quarter’s 94.7%. Revenue, net property income, and distribution barely budged at 0.9%, 0.2% and -0.4 respectively.

Things will turn around, though, around FY3/18-19. 2017 and 2018 are lean supply years, especially for high-spec and business parks. Maybank KE expects portfolio occupancy to pick up in those years, and for Hewlett Packard-VTS and Kallang Basin 4 to start contributing.

Moreover, distribution per unit (DPU) for FY3/18-19 should see robust growth of 8.7% and 5.2% respectively, even accounting for some drag from Johnson & Johnson possibly foregoing lease renewal in June 2018.