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Sunday, February 06, 2022

Mapletree Commercial Trust Review @ 6 February 2022

Basic Profile & Key Statistics

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

Performance Highlight

For YTD FY21/22, gross revenue and NPI have improved YoY due to lower rental rebates and higher compensation received from lease pre-terminations.

Shopper Traffic & Tenant Sales
The tenant sales has recovered close to 90% of pre-COVID level after easing of restriction from 22 Nov, despite shopper traffic is only around 50% of pre-COVID level.

Related Parties Shareholding

  • REIT sponsor's shareholding is high at 32.537%
  • REIT manager's shareholding is high at 3.095%
  • Directors of REIT manager's shareholding is high at 0.222%

Lease Profile

  • Occupancy is slightly high at 96.3%
  • WALE is short at 2.7 years
  • Highest lease expiry within 5 years is low at 23.5% which falls in FY22/23
  • Weighted average land lease expiry is slightly long at 75.47 years

Debt Profile

  • Gearing ratio is slightly low at 34.1%
  • Cost of debt is moderate at 2.39%
  • Fixed rate debt % is moderate at 75.3%
  • All debts are unsecured debt
  • WADM is long at 3.5 years
  • Highest debt maturity within 5 years is low at 24% which falls in FY24/25
  • Interest coverage ratio is slightly high at 4.8 times

Diversification Profile

  • All of its properties are located in Singapore
  • Top property contribution is high at 43.1%
  • Top 5 properties contribution is high at 100%
  • Top tenant contribution is low at 10.7% 
  • Top 10 tenants contribution is low at 28.5%

Key Financial Metrics

  • Property yield is slightly 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 - Below -1SD for 1y, 3y & 5y
  • Dividend Yield - Above +2SD for 1y; Above +1SD for 3y; Above average for 5y

Author's Opinion

 Favorable Less Favorable
Diversified SectorShort WALE
High REIT Sponsor's ShareholdingHigh Top Geographical Contribution
High REIT Manager's ShareholdingHigh Top Property & Top 5 Properties Contributions
High Directors of REIT Manager's ShareholdingProperty Yield Downtrend
Well Spread Lease ExpiryDistribution on Capital Downtrend
100% Unsecured Debt 
Long WADM 
Well Spread Debt Maturity 
Low Top Tenant & 10 Tenants Contributions 
Competitive Management Fees 
High Distribution Margin 
NAV per Unit Uptrend

With the easing of COVID restriction, gross revenue and NPI have improved as compared to the previous quarter. For retention, there is a remaining S$ 15.7 million retentions left. The current big news for MCT would be the proposed merger with MNACT. The pro-forma DPU and NAV per unit are expected to be improved. There are 2 scheme consideration options for MNACT unitholders as below:

EGM is expected to be held in April. After the news, MCT share price has decline to current 52 weeks low range. For those who are interested, you could refer to my previous post - Theoretical Pegged Price for ALOG + ESR-REIT & MCT + MNACT Mergers for bloggers' opinions on this merger as well as pegged price table.


You could also refer below for more information:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts


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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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