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Thursday, July 29, 2021

Mapletree Commercial Trust Review @ 29 July 2021

Basic Profile & Key Statistics

Mapletree Commercial Trust (MCT) invests in both office and retail properties and currently owns 5 properties in Singapore.     

Performance Highlight

Performance improved mainly due to lower rental rebate and compensation from a lease pre-termination at mTower.

Both shopper traffic and tenant sales decreased since Phase 2 Heightened Alert in May. 

Related Parties Shareholding

  • REIT sponsor's shareholding is high at 32.59%
  • REIT manager's shareholding is high at 3.03%
  • Directors of REIT manager's shareholding is high at 0.22%

Lease Profile

  • Occupancy is slightly high at 95.4%
  • WALE is short at 2.4 years
  • Highest lease expiry within 5 years is moderate at 25.9% which falls in FY22/23
  • Weighted average land lease expiry is slightly long at 75.97 years

Debt Profile

  • Gearing ratio is slightly low at 34.2%
  • Cost of debt is moderate at 2.44%
  • Fixed rate debt % is moderate at 75.7%
  • All debts are unsecured debt
  • WADM is long at 4 years
  • Highest debt maturity within 5 years is low at 24% which falls in FY24/25
  • Interest coverage ratio is high at 4.8 times

Diversification Profile

  • All of its properties are located in Singapore
  • Top property contribution is high at 44.7%
  • Top 5 properties contribution is high at 100%
  • Top tenant contribution is moderate at 10.7% 
  • Top 10 tenants contribution is low at 28.5%

Key Financial Metrics

  • Property yield is low at 4.5% 
  • Management fees over distribution is low at 11.9% in which unitholders receive S$ 8.40 for every dollar paid 
  • Distribution on capital is slightly high at 3.6%
  • Distribution margin is high at 65.7%
  • Including retention, management fees over distribution, distribution on capital and distribution margin would be 11.4% (low), 3.8% (high) and 69% (high) respectively.

Trends

  • Uptrend - DPU(include retention), NAV per Unit
  • Flat - Distribution Margin (include retention)
  • Downtrend - Interest Coverage Ratio, Property Yield, Distribution on Capital

Relative Valuation

  • P/NAV - Higher than average for 1y, 3y and 5y
  • Dividend Yield - Higher than average for 1y; Average for 3y; Lower than average for 5y

Author's Opinion

 Favorable Less Favorable
Diversified SectorShort WALE
High REIT Sponsor's Shareholding High Top Geographical Contribution
High REIT Manager's Shareholding High Top Property & Top 5 Properties Contributions
High Directors of REIT Manager's ShareholdingLow Property Yield
100% Unsecured DebtInterest Coverage Ratio Downtrend
Long WADMProperty Yield Downtrend
Well Spread Debt MaturityDistribution on Capital Downtrend
High Interest Coverage Ratio 
Low Top 10 Tenants Contribution 
Competitive Management Fees 
High Distribution on Capital (Include Retention) 
DPU Uptrend (Include Retention) 
NAV per Unit

MCT fundamentals and performance remain resilient, albeit this quarter decreased as compared to the previous quarters. The drop is possibly due to the rental rebates given to eligible tenants due to phase 2 and phase 3 heightened alert. For retention, there is a remaining S$ 15.7 million retention left. 


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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee 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 and 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.

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