Mapletree Industrial Trust

VB, still learning how to value REITS.  MIT FY22/23 announcement just came out 

In looking at the P/L, it indicated a $110.632M net loss from valuation.  Should we be concern on this?  Seems excessive??  What I'm not understanding is in the Portfolio Valuation (page 12 of Result Slides), it actually show an increase instead.  Anyone care to enlighten?

Also puzzled by the non-tax deductible is it also usual to see large fluctuations $46,441K (for FY22/23) vs -$107,018K (for FY21/22): see page 6 of Financial Result.  The footnotes says its valuation loss/gain property under development.  Do we normally expect such fluctations?

Appreciation any clarification. Thanks.

J

(27-04-2023, 10:17 PM)heyjojos Wrote: VB, still learning how to value REITS.  MIT FY22/23 announcement just came out 

In looking at the P/L, it indicated a $110.632M net loss from valuation.  Should we be concern on this?  Seems excessive??  What I'm not understanding is in the Portfolio Valuation (page 12 of Result Slides), it actually show an increase instead.  Anyone care to enlighten?

hi heyjojos,

Net loss from valuation I have observed that most REITs are recording a FVTPL loss due to increase in capitalization rates as a result of increase in risk-free rates in recent times. This is definitely not unique to MIT. But whether is this excessive or not, I do not have a good idea. If one has a good idea of cap rates, then one can compare what MIT is using vs relevant benchmarks. For example, HongKongLand is valued at <50% NAV. Could it be due to its super low cap rates? And whether should one be concern or not, I can only say this is part of the property cycle.

Portfolio Valuation Actually page12 seems to have given the answer and I will paste it as below:
The marginal increase in Singapore Portfolio valuation was largely attributed to the completion of 161, 163 and 165 Kallang Way
So while there is negative adjustment in FV for the properties, there is asset enhancement/development work that is been capitalized onto the balance sheet. From page24 of FY results, one can see that 124mil was added and then transferred to investment properties. And this money was largely funded through proceeds from the DRP (page33). As this AEI amount is larger than the FV loss, it may explain the the overall YoY increase in portfolio valuation.

As for the "Non-tax deductible/(chargeable) items" variations, unfortunately, I have not really look deep (nor invest in REITs), so I do not have a ready answer for that.

(28-04-2023, 11:51 AM)weijian Wrote:

(27-04-2023, 10:17 PM)heyjojos Wrote: VB, still learning how to value REITS.  MIT FY22/23 announcement just came out 

In looking at the P/L, it indicated a $110.632M net loss from valuation.  Should we be concern on this?  Seems excessive??  What I'm not understanding is in the Portfolio Valuation (page 12 of Result Slides), it actually show an increase instead.  Anyone care to enlighten?

hi heyjojos,

Net loss from valuation I have observed that most REITs are recording a FVTPL loss due to increase in capitalization rates as a result of increase in risk-free rates in recent times. This is definitely not unique to MIT. But whether is this excessive or not, I do not have a good idea. If one has a good idea of cap rates, then one can compare what MIT is using vs relevant benchmarks. For example, HongKongLand is valued at <50% NAV. Could it be due to its super low cap rates? And whether should one be concern or not, I can only say this is part of the property cycle.

Portfolio Valuation Actually page12 seems to have given the answer and I will paste it as below:
The marginal increase in Singapore Portfolio valuation was largely attributed to the completion of 161, 163 and 165 Kallang Way
So while there is negative adjustment in FV for the properties, there is asset enhancement/development work that is been capitalized onto the balance sheet. From page24 of FY results, one can see that 124mil was added and then transferred to investment properties. And this money was largely funded through proceeds from the DRP (page33). As this AEI amount is larger than the FV loss, it may explain the the overall YoY increase in portfolio valuation.

As for the "Non-tax deductible/(chargeable) items" variations, unfortunately, I have not really look deep (nor invest in REITs), so I do not have a ready answer for that.

Thanks for your reply.  Have a better understanding now.