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Friday, November 12, 2021

Mapletree North Asia Commercial Trust Review @ 11 November 2021

 Basic Profile & Key Statistics

Mapletree North Asia Commercial Trust (MNACT) invests in Office and Retail properties and owns 13 properties across China, Hong Kong, Japan and South Korea. 

Performance Highlight

Performance has improved YoY due to lower rental relief to Festival Walk and contribution from HPB which was acquired in June 2021. 
Rental reversion for Festival Walk and Gateway Plaza continue to be negative while other properties have positive rental reversion.

Compared to the 2019 same period, retail sales have recovered to 83% while traffic recovered to around 70%.

Related Parties Shareholding

  • REIT sponsor's shareholding is high at 38.133%
  • REIT manager's shareholding is high at 5.335%
  • Directors of REIT manager's shareholding is high at 0.201%

Lease Profile

  • Occupancy is high at 97.9%
  • Income in SGD/Major Currencies is low at 24.7%.
  • WALE is short at 2.5 years
  • Highest lease expiry within 5 years is high at 36.2% which falls in FY23/24 
  • Weighted Average Land Lease Expiry is short at 46.55 years

Debt Profile

  • Gearing ratio is slightly high at 41.4%. Include perps, gearing is at 44.4%.
  • Cost of debt is low at 1.84%
  • Fixed rate debt % is moderate at 79%
  • Unsecured debt % is low at 69%
  • WADM is moderate at 2.99 years
  • Highest debt maturity within 5 years is low at 23% which falls in FY23/24
  • Interest coverage ratio is moderate at 4.2 times
  • Perpetual securities over debts is moderate at 6.7%

Diversification Profile

  • Top geographical contribution is low 48% 
  • Top property contribution is high at 48% 
  • Top 5 properties contribution is high at 89.9% 
  • Top tenant contribution is low at 8.4% 
  • Top 10 tenants contribution is moderate at 36.8%

Key Financial Metrics

  • Property yield is low at 3.9% 
  • Management fees over distribution is low at 10.3% in which unitholders receive S$ 9.71 for every dollar paid 
  • Distribution on capital is low at 2.9%
  • Distribution margin is high at 55.9%

Trends

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

Relative Valuation

  • P/NAV - Average for 1y, 3y and 5y
  • Dividend Yield - Above +1SD for 1y;  Average fo 3y and 5y

Author's Opinion

 Favorable Less Favorable
Diversified SectorLow Income in SGD/Major Currencies
High REIT Sponsor's ShareholdingShort WALE
High REIT Manager's ShareholdingConcentrated Lease Expiry
High Directors of REIT Manager's ShareholdingShort Weighted Average Land Lease Expiry
High OccupancyLow Unsecured Debt %
Low Cost of DebtHigh Top Property & Top 5 Properties Contributions
Well Spread Debt MaturityLow Property Yield
Low Top Geographical ContributionLow Distribution on Capital
Low Top Tenant ContributionDPU Downtrend
Competitive Management FeeProperty Yield Downtrend
High Distribution MarginDistribution on Capital Downtrend

As compared to the previous quarter, gross revenue and NPI have increased mainly due to the income contribution from newly acquired HPB in June 2021. Since the incident of protest in Hong Kong in 2019, MNACT has acquired several properties to improve its portfolio diversification and in turn, reduce the income concentration from Festival Walk. However, the continuous negative rental reversion of Festival Walk and Gateway Plaza would be a drag on the performance as both contribute to around 2/3 of gross revenue.


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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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