On 24th October 2024, Mapletree Pan Asia Commercial Trust (MPACT) released their 2QFY24/25 Financial Results. Mapletree Pan Asia Commercial Trust (“MPACT”) was formed as a result of the merger between Mapletree Commercial Trust and Mapletree North Asia Commercial Trust. I was a unitholder of Mapletree Commercial Trust. Due to the merger, I became exposed to the underperforming assets in Hong Kong.
As shared in the last quarter, MPACT is facing headwinds due to underperforming assets in China and high finance costs due to higher interest rates on SGD, HKD and JPY borrowings. What is Mapletree Pan Asia Commercial Trust (MPACT) share price? What is MPACT current dividend yield? Have the financials improved? Let us take a look below at its latest financial results.
MPACT 2QFY24/25 Financial Results
Gross revenue fell 6.1% year-on-year to S$225.6 million. The decline was because of reduced contribution from Singapore properties due to Mapletree Anson’s divestment on 31 July 2024.
On a bright note, MPACT’s finance costs improved 2.6% year-on-year due to the use of Mapletree Anson’s divestment proceeds to reduce borrowings which were partially offset by increased interest rates on SGD, HKD and JPY borrowings.
Distribution Per Unit (DPU) was 11.9% lower year-on-year, largely due to the lower overseas contributions and further dampened by adverse forex movements. There was also an absence of one-off property tax refund in 2QFY24/25.
| 2QFY24/25 (S$’000) |
2QFY23/24 (S$’000) |
% Change | |
| Gross Revenue | 225,619 | 240,162 | (6.1) |
| Net Property Income | 167,674 | 183,158 | (8.5) |
| Property expenses |
(57,945) | (57,004) | (1.7) |
| Net Finance Costs |
(56,035) | (57,553) | 2.6 |
| Amount Distributable To Unitholders | 103,996 | 118,035 | (11.9) |
| Distribution Per Unit (“DPU”) (cents) | 1.98 | 2.24 | (11.6) |
MPACT 1Q FY24/25 Debt
MPACT’s current gearing stood at 38.4% which was lower than 40.5% previously. MPACT’s Total gross debt was lowered from S$6,818.9 million (as of 30 June 2024) to S$6,084.3 million (as of 30 September 2024) after utilising proceeds from the Mapletree Anson divestment to reduce floating-rate debt.
As you can see from the above chart, MPACT maintained a well-distributed debt maturity profile, with no single financial year facing more than 24% of debt refinancing.
The average term to maturity stood at 3.3 years. There are estimated S$1.0 billion of cash and undrawn committed facilities, ensuring ample financial liquidity to meet working capital needs and financial obligations.
MPACT’s Occupancy
Occupancy fell from 94% on 30th June 2024 to 90.3% as of 30th September 2024. As you can see from the above table, Japan properties are the main contributor of the decline. Fujitsu Limited, the single tenant of Fujitsu Makuhari Building, has expressed intention not to renew its lease upon expiry on 31 March 2026.
Next, let us take a look at the rental reversion. Do you know what is rental reversion? Rental reversion refers to the change in rental rates when leases are renewed. A positive rental reversion means the new rental rate is higher than the previous rate. A negative rental reversion happens when the new rental rate is lower than the previous rate. Whether the rental reversion is positive or negative depends on the market demand and supply.
Overall, MPACT maintained its positive rental reversion of +4.1%.
MPACT 2QFY24/25 Lease Expiry
Lease expiry remained well-staggered. The weighted average lease expiry (WALE) was 2.2 years for the retail segment and 2.5 years for the office/business park segment, resulting in an overall portfolio WALE of 2.3 years.
MPACT Share Price and Dividend Yield
MPACT share price closed at S$1.34 on Friday, 25th October 2024. Based on MPACT’s FY23/24 full year distribution of 8.91 cents and share price of S$1.34, this translates to a high current dividend yield of 6.65%.
Despite the high current dividend yield, it is expected that the full year dividend yield may be much lower due to lower DPU for each quarter.
Summary of MPACT 2QFY24/25 Financial Results
Based on the financial results, we can see that MPACT continue to face headwinds due to its underperforming oversea assets. Now, Let me summarize the pros and cons.
The pros are:
- Finance costs improved 2.6% year-on-year due to the use of Mapletree Anson’s divestment proceeds to reduce borrowings.
- Current gearing is lower at 38.4%.
- Positive rental reversion of +4.1%.
- Lease expiry remained well-staggered.
- High current dividend yield of 6.65%.
The cons are:
- Gross revenue fell 6.1% year-on-year to S$225.6 million.
- Distribution Per Unit (DPU) was 11.9% lower year-on-year.
- Occupancy fell to 90.3%.