Mapletree North Asia Commercial Trust Review @ 10 February 2021

Basic Profile & Key Statistics

Mapletree North Asia Commercial Trust (MNACT) invests in Office and Retail properties which owns 12 properties across China, Hong Kong, Japan and South Korea. 

Performance Review

Gross revenue increased by 4.7% YoY while NPI decreased by 2.3%. The decline is due to rental relief but is offset by contributions from mBAY POINT Makuhari and Omori Prime Building in Japan.

YTD rental reversion is at -17% (retail) for Festival walk and -11% for Gateway Plaza. Positive rental reversion is achieved by Sandhill Plaza and Japan properties. 

Both footfall and retail sales are improved from October to mid-November. However, Festival Walk was closed from mid-Nov to mid-Jan due to tighter social distancing measures that were re-imposed because of the resurgence of COVID-19 cases.

Lease Profile

• Occupancy is slightly high at 96.9%
• Income in SGD/major currencies is low at 25%
• WALE is short at 2.4 years
• Highest lease expiry within 5 years is moderate at 29% which falls in FY22/23
• Weighted average land lease expiry is short at 39.31 years

Debt Profile

• Gearing ratio is high at 41.3%
• Cost of debt is low at 2.04%
• Fixed rate debt % is moderate at 75%
• Unsecured debt % is moderate at 74%
• WADE is long at 3.2 years 
• Highest debt maturity within 5 years is low at 24% which falls in 2025
• Interest coverage ratio is low at 3.4 times

Diversification Profile

• Top geographical contribution is low at 46.5%
• Top property contribution is high at 46.5%
• Top tenant contribution is low at 7.7% 
• Top 10 tenants contribution is slightly low at 35.8% 

Key Financial Metrics

• Property yield is low at 3.4%
• Management fees over distribution is competitive at 10.3% in which unitholders receive S$ 9.71 for every dollar paid
• Distribution on capital is low at 2.5% 
• Distribution margin is high at 53.9%

Trends

• Uptrend - NAV per Unit
• Slight Downtrend - Distribution Margin
• Downtrend - DPU, Interest Coverage Ratio, Property Yield, Distribution on Capital

Relative Valuation

• Dividend Yield - Annualized past 4 quarters DPU @ 5.923 cents / average yield @ 6.75% = S$ 0.88
• Price/NAV - NAV @ S$ 1.306 x average P/NAV @ 0.83 = S$ 1.08

Author's Opinion

Favorable	Less Favorable
Diversified Sector	Low Income in SGD/Major Currencies
Low Cost of Debt	Short WALE
Long WADE	Short Weighted Average Land Lease Expiry
Well Spread Debt Maturity	High Gearing Ratio
Low Top Geographical Contribution	Low Interest Coverage Ratio
Low Top Tenant Contribution	High Top Property Contribution
Competitive Management Fees	Low Property Yield
High Distribution Margin	Low Distribution on Capital
NAV per Unit Uptrend	DPU Downtrend
	Interest Coverage Ratio Downtrend
	Property Yield Downtrend
	Distribution on Capital Downtrend

MNACT performance has been improved as compared to the previous quarter. However, due to tighter social distancing measures that were re-imposed in Hong Kong (which extended 17 February), Festival Walk performance has been impacted again. As for Japan properties in Tokyo and Chiba, occupancy and rental reversion would likely be affected due to the state of emergency that was declared in January 2021 and extended until 7 March. In view of the COVID-19 situation, management mentioned in the presentation that performance in FY20/21 is expected to be lower than that in FY19/20.

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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee the accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions as well as loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.