Mapletree Commercial Trust 1QFY20/21 Financial Results

Mapletree Commercial Trust VivoCity

Mapletree Commercial Trust has announced their 1QFY20/21 financial results on 23rd July 2020. No distribution was declared as Mapletree Commercial Trust has adopted the new half-yearly reporting framework with effect from FY20/21. Any distributions to Unitholders is on a half-yearly basis with effect from FY20/21.

Similar to other shopping malls, VivoCity’s 1Q FY20/21 shopper traffic and tenant sales were impacted by eight-week circuit breaker and other COVID-19 restrictions.

Gross revenue and Net Property Income (“NPI”) was down 10.5% and 10.7% respectively from 1Q FY19/20. The decline was mainly due to COVID-19 rental rebates disbursed during the quarter but was mitigated by contribution from Mapletree Business City II (“MBC II”) acquired in November 2019.

1QFY20/21 Financial Results

1QFY20/21
(S$’000)
1QFY19/20
(S$’000)
YoY(%)
Gross Revenue 100,347 112,128 (10.5%)
Net Property Income 78,864 88,347 (10.7%)

Occupancy

As of 30th June 2020, occupancy stood at 98.2%. Mapletree Business City (“MBC”) continues to provide support and stability.

MCT Occupancy 30 June 2020

Debt

As of 30th June 2020, gearing ratio stood at 33.7%. 100% of the assets remained unencumbered. This is the best thing I like about Mapletree Commercial Trust.

New facilities secured and on track to refinance all borrowings due in FY20/21 and FY21/22.

MCT Debt Maturity 30 June 2020

Current Dividend Yield

Based on the current share price of S$1.90 and FY19/20 full year distribution of 8 cents, this translate to a current dividend yield of 4.21%.

If we based on FY18/19 full year distribution of 9.14 cents, the current dividend yield is 4.81%.

In my opinion, the dividend yield is not very attractive at the current share price.

Mapletree Commercial Trust Share Price 29 July 2020

Summary

Mapletree Commercial Trust makes up 10.06% of my stock portfolio and thus it is unlikely I am going to increase my allocation of Mapletree Commercial Trust.

The acquisition of MBC has added diversification to its portfolio consisting of retail and offices. As such, the impact by COVID-19 is not felt as strongly as compare to pure retail reits such as CapitaLand Mall Trust.

Having said that, as companies and businesses impacted by COVID-19 move to contain costs, more are pursuing to downsize through renewals or relocations. In Q2 2020, office rents corrected for the second consecutive quarter. Looking forward, vacancy levels are likely to rise as the volume of secondary space increases due to the relocations of major occupiers. Coupled with subdued demand, CBRE expects further downward pressure on rents in the second half of 2020.

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

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 Revenue 127,320 112,899 12.8%
Net Property Income 98,571 87,560 12.6%
Distributable amount before capital
allowance claims and capital distribution
retention
73,851 66,861 10.5%
Distributable Amount 30,098 66,861 (55.0)%
Distribution Per Unit (“DPU”) (cents) 0.91 2.31 (60.6)%

FY19/20 Full Year Financial Results

FY19/20
(S$’000)
FY18/19
(S$’000)
YoY(%)
Gross Revenue 482,825 443,893 8.8%
Net Property Income 377,940 347,627 8.7%
Distributable amount before capital
allowance claims and capital distribution
retention
287,587 264,027 8.9%
Distributable Amount 243,218 264,027 (7.9)%
Distribution Per Unit (“DPU”) (cents) 8.00 9.14 (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.

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

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%.

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

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.