Mapletree Commercial Trust 4QFY19/20 DPU Fell 60.6% – Is It A Good Time to Buy?

Mapletree Commercial Trust had released their 4QFY19/20 financial results yesterday on 22nd April 2020. The results are excellent with gross revenue and net property income (“NPI”) up 12.8% and 12.6% respectively from 4Q FY18/19, driven mostly by Mapletree Business City (“MBC”) II and in spite of COVID-19 rental rebates.

However, in view of the uncertainties from the current COVID-19 situation, Mapletree Commmercial Trust had retained S$43.7 million from the distributable amount. Thus, Distribution Per Unit (“DPU”) had fallen 60.6% to 0.91 cents for 4QFY19/20.

Similar to what Suntec mall has done, fixed rent for April 2020 will be waived for eligible
retail tenants which is on top of the S$29 million of relief packages that have been granted/committed to support its retail tenants. This will have an impact on subsequent distributable income for subsequent quarters. On a positive note, this impact should be cushioned by the income coming from MBC I and II.

4QFY19/20 Financial Results

4QFY19/20
(S$’000)
4QFY18/19
(S$’000)
YoY(%)
Gross Revenue127,320112,89912.8%
Net Property Income98,57187,56012.6%
Distributable amount before capital
allowance claims and capital distribution
retention
73,85166,86110.5%
Distributable Amount30,09866,861(55.0)%
Distribution Per Unit (“DPU”) (cents)0.912.31(60.6)%

FY19/20 Full Year Financial Results

FY19/20
(S$’000)
FY18/19
(S$’000)
YoY(%)
Gross Revenue482,825443,8938.8%
Net Property Income377,940347,6278.7%
Distributable amount before capital
allowance claims and capital distribution
retention
287,587264,0278.9%
Distributable Amount243,218264,027(7.9)%
Distribution Per Unit (“DPU”) (cents)8.009.14(12.5)%

Occupancy

Occupancy stood at 98.7%. Full year shopper traffic and tenant sales at VivoCity lower by 6.8% and 3.4% respectively largely due to COVID-19 impact in 4Q FY19/20.

Debt

Gearing ratio stood at 33.3% which is in a healthy range with all term loans due in FY19/20 refinanced in advance.

Current Dividend Yield

Based on FY19/20 full year distribution of 8 cents and current price of S$1.75, this translates to a current dividend yield of 4.57%.

If Mapletree Commercial Trust continues to pay out only 0.91 cents for each quarter in FY20/21, this translates to an estimated dividend yield of 2.08%.

Summary

My opinion of Mapletree Commercial Trust is that it is still expensive at current price. Just based on the FY19/20 full year distribution of 8 cents, this only gives a current dividend yield of 4.57%.

Even if you catch it at the price of S$1.50, this only gives you a dividend yield of 5.33%. The worst case is Mapletree Commercial Trust continues to retain capital for the next few quarters and you see the dividend yield at 2.08%.

However, Mapletree Commercial Trust is a great REIT with outstanding financial results. When the COVID-19 situation is over, I believe it will regain its shine but then the share price should have priced in the recovery.

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