MPACT 4Q FY23/24 Financial Results

MPACT 4Q FY23/24 Financial Results

MPACT 4Q FY23 FY24 Key Highlights

MPACT (Mapletree Pan Asia Commercial Trust) released their 4Q FY23/24 Financial Results on 24th April 2024. Despite facing forex and interest rate headwinds, MPACT’s gross revenue grew 2.6% year-on-year. The growth was led by the strong performance of MPACT’s Singapore assets and stable contribution from Festival Walk, its flagship retail mall in Hong Kong. Given the positive news, how will Mapletree Pan Asia Commercial Trust share price perform?

A week before MPACT announced its 4Q FY23/24 financial results, I added more of MPACT to my stock portfolio. Why did I buy more of MPACT despite the REIT is facing headwinds? In my opinion, I observed that MPACT assets are recovering. The other positive news I am waiting for is the Fed decision to cut rates.

Now, let us take a detailed look at Mapletree Pan Asia Commercial Trust’s 4th quarter FY23/24 financial results below to analyse if we can still invest into this REIT.

MPACT 4Q FY23/24 Financial Results

In the 4th quarter, MPACT’s Gross revenue and Net Property Income climbed 2.6% and 3.2% year-on-year to S$239.2 million and S$183.1 million respectively. As shared earlier, the growth was attributed to the solid performance of Mapletree Pan Asia Commercial Trust’s Singapore assets and stable contribution from Festival Walk in Hong Kong.

Based on the table below, Net Finance costs was 10.8% higher as compared to the same quarter in FY22/23. However, the growth in Net Property Income has covered the higher finance costs.

As a result of the growth, Distribution Per Unit (DPU) grew 1.8% to 2.29 cents.

4Q FY23/24
(S$’000)
4Q FY22/23
(S$’000)
% Change
Gross Revenue239,222233,2712.6
Net Property Income183,135177,3783.2
Property expenses
(56,087)(55,893)0.3
Net Finance Costs
(56,434)(50,920)10.8
Amount Distributable To Unitholders120,522117,5902.5
Distribution Per Unit (“DPU”) (cents)2.292.251.8

MPACT FY23/24 Full Year Financial Results

Despite a stronger 4th quarter, full year distribution per unit was down 7.3% to 8.91 cents. This better than my conservative estimate in the 3rd quarter.

Overall, Distribution Per Unit was weighted down by:

  • Full-year impact of higher utility costs.
  • Higher interest rates.
  • Forex impact from a stronger Singapore Dollar against all foreign currencies.
FY23/24
(S$’000)
FY22/23
(S$’000)
% Change
Gross Revenue958,088826,18516.0
Net Property Income727,929 631,94215.2
Property expenses
(230,159)(194,243)18.5
Net Finance Costs
(225,482)(162,159)39.0
Amount Distributable To Unitholders468,569445,5985.2
Distribution Per Unit (“DPU”) (cents)8.919.61(7.3)

MPACT 4Q FY23/24 Debt

MPACT 4Q FY23 FY24 Debt Maturity

As of 31st March 2024, MPACT’s outstanding debt stood at S$6,803.0 million. The aggregate leverage ratio still remained high at 40.5%.

Average Term to Maturity of Debt is short at 3 years. This metric reflects the average time remaining until MPACT’s outstanding debt matures. A longer average maturities provide REITs with more flexibility to navigate interest rate changes and refinancing needs.

77% of MPACT’s debt are hedged at fixed rates to mitigate against interest rate uncertainties. Every
50 bps change in benchmark rates is estimated to impact MPACT’s Distribution Per Unit (DPU) by 0.13 cents per annum.

MPACT’s Occupancy

MPACT 4Q FY23 FY24 Occupancy

MPACT’s overall portfolio occupancy remained high at 96.1%. MPACT renewed and re-let approximately 2.6 million square feet of lettable area, achieving a portfolio positive rental reversion of 2.9%. The Singapore portfolio stood out with notable rental uplifts from 6.7% at Mapletree Business City to 14.0% at VivoCity.

As you can see from the table above, VivoCity’s occupancy is 100%. The full-year tenant sales set a new record at nearly S$1.1 billion.

In Hong Kong, Festival Walk’s resilience was supported by strong committed occupancy of 99.7% and continued advancement towards rental stabilisation.

MPACT 4Q FY23/24 Lease Expiry

MPACT 4Q FY23 FY24 Lease Expiry

The weighted average lease expiry (“WALE”) was 2.1 years for the retail segment and 2.7 years for the office/business park segment, resulting in an overall portfolio WALE of 2.4 years.

A longer WALE indicates a lower risk of vacancy and a more stable income stream, which is generally preferred by investors. Having said that, MPACT’s short WALE allows the manager to renegotiate (escalate) rental rates during renewal and also diversify its tenant mix to adapt to market changes.

MPACT’s Current Dividend Yield

MPACT Share Price 30-Apr-2024

The market reacted positively to MPACT’s latest financial results and thus the share price increased slightly from its low of S$1.21. Based on Mapletree Pan Asia Commercial Trust’s closing share price of S$1.26 on 30th April and FY23/24 full year distribution of 8.91 cents, this translates to a high current dividend yield of 7.07%.

Summary of MPACT 4Q FY23/24 Financial Results

The pros are:

  • MPACT’s Gross revenue and Net Property Income climbed 2.6% and 3.2% year-on-year to S$239.2 million and S$183.1 million respectively.
  • Solid performance from VivoCity and Festival Walk.
  • 77% of MPACT’s debt are hedged at fixed rates to mitigate against interest rate uncertainties.
  • MPACT’s overall portfolio occupancy remained high at 96.1%.
  • Portfolio positive rental reversion of 2.9%.
  • In Q4, Distribution Per Unit (DPU) grew 1.8% to 2.29 cents.
  • High current dividend yield of 7.07% at closing price of S$1.26.

The cons are:

  • Aggregate leverage ratio still remained high at 40.5%.
  • Average Term to Maturity of Debt is short at 3 years.
  • Full year distribution per unit was down 7.3% to 8.91 cents.

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