On 19th April 2022, Mapletree North Asia Commercial Trust (MNACT) released their 2HFY21 and FY21/22 Financial Results. How did MNACT performed under the COVID-19 pandemic?
As MNACT is undergoing a merger with Mapletree Commercial Trust (MCT), I am also keen to know if this will lift up MCT or drag down MCT. Let us find out more below by looking at their overall financial results below.
Before we drill further, let us do a quick recap on the current portfolio of MNACT. MNACT’s portfolio comprises of thirteen commercial properties in China, in Hong Kong SAR, Japan and South Korea, with a total lettable area of 5.9 million square feet. Their total book value is S$8,267.1 million as of 31 March 2022.
Existing investors are very much concern on the outlook of MNACT given that over the years, there has been ongoing riots in Hong Kong (Burning down Christmas Tree at Festive Walk), Uncontrollable outbreaks of COVID-19 and outflow of foreign investors due to government restrictions that impacted businesses.
2H FY21/22 Financial Results
I am surprised by how well MNACT did in 2H FY21/22. Gross revenue and Net Property Income (NPI) increased by 4.9% and 5.1% respectively.
| 2H FY21/22 (S$’000) | 2H FY20/21 (S$’000) | Change | |
| Gross Revenue | 211,235 | 201,316 | 4.9% |
| Net Property Income | 160,062 | 152,300 | 5.1% |
| Distributable Income | 119,686 | 113,318 | 5.6% |
| Distribution Per Unit (“DPU”) (cents) | 3.393 | 3.299 | 2.8% |
Full Year FY21/22 Financial Results
The full year financial results are also excellent. Gross revenue and Net Property Income (NPI) increased by 9.0% and 10.2% respectively.
As I drilled into more details, there was lower rental reliefs granted to the retail tenants at FW (FY21/22: S$14.7 million, 2H FY21/22: S$10.0 million) compared to the same period last year (FY20/21: S$49.8 million, 2H FY20/21: S$14.9 million). The is a good thing for MNACT but a bad thing for retail tenants.
Average rental rates was lower at Festive Walk mall and Gateway Plaza.
There was additional revenue contribution from Hewlett-Packard Japan Headquarters Building (HPB) acquired on 18 June 2021 and The Pinnacle Gangnam (TPG) from 30 October 2020.
As a dividend investor, I will definitely be happy to see that DPU increased 10.4% y-o-y to 6.819 cents.
| FY21/22 (S$’000) | FY20/21 (S$’000) | Change | |
| Gross Revenue | 426,676 | 391,415 | 9.0% |
| Net Property Income | 321,941 | 292,040 | 10.2% |
| Distributable Income | 239,219 | 210,150 | 13.8% |
| Distribution Per Unit (“DPU”) (cents) | 6.819 | 6.175 | 10.4% |
Portfolio Occupancy
As of 31st March 2022, the overall portfolio occupancy stood at 97.4%.
| Asset | Occupancy |
| Festive Walk | 99.6% |
| Gateway Plaza, Beijing | 94.3% |
| Sandhill Plaza, Shanghai | 98.6% |
| Japan Properties | 97.7% |
| The Pinnacle Gangnam, Seoul | 97.3% |
Debt
Aggregate leverage ratio stood at 41.5% which in my opinion feels high. Average Term to Maturity stood at 2.68 years.
The manager of MNACT claims that they are in healthy liquidity position, comprising committed and uncommitted undrawn credit facilities of S$636.1 million, and cash and bank balances of S$247.3 million as at 31 March 2022.
Current Dividend Yield
Based on the current share price of S$1.23 and FY21/22 DPU of 6.819 cents, this translate to a current dividend yield of 5.54%.
Since MNACT is undergoing a merger with MCT, I will not recommend to invest in MNACT for the dividend yield.
If you are an existing MNACT investor, you can opt for 100% cash which is equivalent to S$1.1949 per unit. You can do your maths right? If you buy MNACT at S$1.23 per unit now and they give you S$1.1949, you will make a loss.
Summary of MNACT FY21 Financial Results
Mapletree North Asia Commercial Trust (MCT) has definitely surprised me with its stellar FY21/22 financial results.
As an existing investor of Mapletree Commercial Trust (MCT), the financial results of Mapletree North Asia Commercial Trust (MNACT) has definitely boosted my confidence in the merger even though there may still be certain risks with the combined portfolio.
If you are a MNACT or MCT investor, what are your feelings about the merger?