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Thursday, November 04, 2021

Mapletree Commercial Trust Review @ 4 November 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

Gross revenue, NPI, income available for distribution and DPU increased YoY mainly due to lower rental rebates and compensation received from mTower and MBC for pre-termination of leases.

Rental reversion is at +2.3%.

Rebased against 2019, shopper traffic and tenant sales in the latest quarter have slightly improved as compared to the heightened alert period. 

Related Parties Shareholding

  • REIT sponsor's shareholding is high at 32.537%
  • REIT manager's shareholding is high at 3.063%
  • Directors of REIT manager's shareholding is high at 0.222%

Lease Profile

  • Occupancy is slightly high at 96%
  • WALE is short at 2.8 years
  • Highest lease expiry within 5 years is high at 32.7% which falls in FY25/26 & beyond, without breakdown.
  • Weighted average land lease expiry is slightly long at 75.72 years

Debt Profile

  • Gearing ratio is low at 33.7%
  • Cost of debt is moderate at 2.42%
  • Fixed rate debt % is moderate at 72.6%
  • All debts are unsecured debt
  • WADM is long at 3.8 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%
  • Top 5 properties contribution is high at 100%
  • Top tenant contribution is slightly low 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 11.8% in which unitholders receive S$ 8.47 for every dollar paid 
  • Distribution on capital is moderate at 3.7%
  • Distribution margin is high at 64%
  • Including retention, management fees over distribution, distribution on capital and distribution margin would be 11.2% (low), 3.9% (slightly high) and 67.1% (high) respectively.

Trends

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

Relative Valuation

  • P/NAV - Above average for 1y and 5y; Average for 3y
  • Dividend Yield - Average for 1y and 3y; Below 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
Low Gearing RatioProperty Yield Downtrend
100% Unsecured DebtDistribution on Capital Downtrend
Long WADM 
Well Spread Debt Maturity 
High Interest Coverage Ratio 
Low Top 10 Tenants Contribution 
Competitive Management Fees 
High Distribution Margin 
NAV per Unit Uptrend

MCT fundamentals remain solid however performance continues to be impacted by COVID-19 restriction. From the financial statement, excluding rental rebate, gross revenue would be S$ 261.3 million instead of S$ 243.7 million. Though there is still uncertainty as new COVID-19 cases remain at 3000+ per day, however, hopefully, the vaccinated travel lanes (VTL) could help to improve its flagship - Vivocity performance. For retention, there is a remaining S$ 15.7 million retentions 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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