Mapletree Commercial Trust 3QFY19/20 Financial Results After MBC II Acquisition

Mapletree Commercial Trust has announced their 3QFY19/20 financial results on 22nd January 2020. There are no surprises as all financial results are positive. Income available for distribution increased by 18.0% while Distribution Per Unit (DPU) increased by 5.6%.

It was mentioned that the strong financial performance was driven by the newly acquired Mapletree Business City II (MBC II).

Here are the 3QFY19/20 financial results compared with 3QFY18/19.

3QFY19/20
(S$’000)
3QFY18/19
(S$’000)
Change
Gross Revenue 131,336 112,543 16.7%
Net Property Income 103,298 87,868 17.6%
Distributable Income 79,049 66,992 18.0%
Distribution Per Unit (“DPU”) (cents) 2.46 2.33 5.6%

Debt

As of 31st December 2019, the gearing ratio stood at 33.4%. The average term to maturity of debt is 4.4 years.

Occupancy

Overall portfolio committed occupancy stood at 98.9%.

One of the things that worry me is the decline of shopper traffic. As you can see, shopper traffic declined by 2.2% while tenant sales decreased by 0.5%.

Mapletree Business City II (MBC II)

The acquisition of MBC II seems positive. Below are the increase in DPU, NPI yield and NAV per Unit after the acquisition.

Summary

Overall, Mapletree Commercial Trust has delivered a set of decent results after the acquisition of MBC II. However, I think it is still too early to make a judgement whether the acquisition can continue to be DPU accretive or slow down the growth of the DPU.

Mapletree Commercial Trust currently makes up 11% of my stock portfolio.

CapitaLand Mall Trust and CapitaLand Commercial Trust Proposed Merger

Following the proposed merger between Frasers Logistics and Industrial Trust and Frasers Commercial Trust, another REIT announced their merger. On 22nd January 2020, CapitaLand Mall Trust and CapitaLand Commercial Trust announced their proposed merger.

CapitaMall Trust currently has 15 properties in its portfolio while Capita Commercial Trust has 10 properties. With the proposed merger, the merged REIT will have a total of 24 properties. (Capita Commercial Trust has 60.0% of Raffles City while CapitaMall Trust owns the other 40%)

With the merger, the properties are valued at S$22.9 billion.

With the proposed merger, CapitaLand Commercial Trust holders will receive

  • 0.72 CapitaMall Trust Units per CapitaLand Commercial Trust unit
  • S$0.2590 in cash per CapitaLand Commercial Trust unit

Pro Forma DPU Accretion

CapitaMall Trust currently makes up 9% of my stock portfolio. I currently do not hold any CapitaLand Commercial Trust units thus I will not receive any new CapitaMall Trust units or receive any cash distribution.

However, as a CapitaMall Trust unit holder, I will be keen to know what is the increase in Distribution Per Unit (DPU) after the merger.

According to the presentation slides, Pro forma DPU accretion is expected to increase 1.6% from 11.97 cents to 12.17 cents.

With every announced proposed merger, I noticed the share price has always gone up the next day. The share price of CapitaMall Trust has jumped from S$2.58 to S$2.64.

The share price of CapitaLand Commercial Trust has jumped from S$2.12 to S$2.18.

Past Merger of REITs

Here are the news on the merger of other REITs.

Which is the next REIT that will announce a merger?