Mapletree North Asia Commercial Trust DPU Fell 13.3%

MPACT 1H FY22/23 Financial Results

MPACT 1H FY22/23 Financial Results

Mapletree Pan Asia Commercial Trust (MPACT) has released its 1H FY22/FY23 financial results on 27th October 2022. The REIT was the result of a merger between Mapletree North Asia Commercial Trust (MNACT) and Mapletree Commercial Trust.

With the share price plunging after the merger, this is definitely not good news for both MNACT and MCT investors. How has MPACT fare? Let us take a look below.

Mapletree Pan Asia Commercial Trust (MPACT) 1H FY22/23 Financial Results

Boosted by contribution from properties after the merger, Gross Revenue jumped 44.9% to S$353.2 million.

Net Property Income (NPI) also recorded an increase of 44.9% year-on-year to S$275.2 million.

From what was shared by the manager, the above also attributed to the higher contribution from VivoCity and Mapletree Business City (“MBC”). As an investor of MCT, I have always been proud of these two flagship assets in MCT’s portfolio.

1H FY22/23
(S$’000)
1H FY21/22
(S$’000)
Change
Gross Revenue 353,162 243,722 44.9%
Net Property Income 275,175 189,855 44.9%
Property expenses
(77,987) (53,867) 44.8%
Amount Distributable To Unitholders 200,970 146,456 37.2%
Distribution Per Unit (“DPU”) (cents) 4.94 4.39 12.5%

Occupancy

Overall portfolio occupancy stood at 96.9%. As you can see below, China properties occupancy was a drag to its overall portfolio occupancy.

Rental reversion is a metric captured by some REITs to show whether new leases signed have higher or lower rental rates than before. I am happy that Mapletree Pan Asia Commercial Trust managed to achieve positive rental reversion across its markets.

The overall rental reversion could have performed better if not for Festival Walk in Hong Kong.

Overall Weighted Average Lease Expiry (“WALE”) stood at 2.4 years which is really nothing to worry about in FY22/23.

Debt

Gearing ratio stood at a high of 40.1% with 72.5% of its debt hedged at fixed rate. Despite such high gearing, the manager shared that the debt maturity is well distributed and they have an estimated available liquidity of S$1.3 billion.

In my opinion, this is comforting to investors like me who are worried about the REIT unable to refinance their debt in unforeseen situations.

Under the rising interest rate environment, every 50 bps change in benchmark rates are estimated to impact the Distribution Per Unit (DPU) by 0.16 cent p.a.

Current Dividend Yield

MPACT closed at a share price of S$1.67 on 28th October 2022. If we based on the FY21/22 total DPU of 9.53 cents, this works out to be a current dividend yield of 5.71%.

Summary of MPACT 1H FY22/23 Financial Results

This is the shopper traffic for VivoCity.

And this is the shopper traffic for Festival Walk which you can see how the Hong Kong portfolio is such as drag to MPACT. I believe the impact is due to the country’s COVID-19 policy which continue to impact the retail sector.

The Hong Kong government has recently announced (September 2022) the end of mandatory hotel quarantine for arrivals. This will surely give the tourism and retail sector in Hong Kong a boost. It will be interesting to observe whether performance of Festival Walk will pick up in the next quarter.

With the lifting of COVID-19 restrictions in Singapore, MPACT’s Singapore assets should do well similarly to other retail REITs. However, global inflationary pressures, rising energy prices, interest rate hikes, supply chain disruptions, and manpower shortages will pose challenges.

In Hong Kong, a major recovery of rental rates for the retail market is not expected for this year and will depend on the return of visitors and an improvement in the general economic situation.

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