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Sunday, February 13, 2022

Mapletree North Asia Commercial Trust Review @ 13 February 2022

 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

For 3Q FY21/22, both gross revenue and NPI increased YoY due to absence of rental reliefs and contribution from Hewlett-Packard Japan Headquarters.

Rental Reversion
The YTD rental reversion is negative for Festival Walk and Gateway Plaza, but positive for the remaining properties.

Footfall and Retail Sales
Both footfall and retail sales of Festival Walk have improved as compared to the previous year. For the period from Apr to Nov 2021, the retail sales has recovered to 82% of the same period in 2019, prior to mall closure due to property damage.

Related Parties Shareholding

  • REIT sponsor's shareholding is high at 37.71%
  • REIT manager's shareholding is high at 5.548%
  • Directors of REIT manager's shareholding is high at 0.201%

Lease Profile

  • Occupancy is high at 97.5%
  • Income in SGD/Major Currencies is low at 24.5%.
  • WALE is short at 2.5 years
  • Highest lease expiry within 5 years is high at 36.9% which falls in FY23/24 
  • Weighted Average Land Lease Expiry is short at 46.3 years

Debt Profile

  • Gearing ratio is slightly high at 42.1%. Include perps, gearing is at 45.1%.
  • Cost of debt is low at 1.84%
  • Fixed rate debt % is slightly high at 82%
  • Unsecured debt % is low at 69%
  • WADM is slightly low at 2.76 years
  • Highest debt maturity within 5 years is low at 23% which falls in FY24/25
  • Interest coverage ratio is moderate at 4.2 times
  • Perpetual securities over debts is moderate at 6.6%

Diversification Profile

  • Top geographical contribution is low 48.2% 
  • Top property contribution is high at 48.2% 
  • Top 5 properties contribution is high at 89.4% 
  • Top tenant contribution is low at 8.6% 
  • Top 10 tenants contribution is moderate at 37.4%

Key Financial Metrics

  • Property yield is low at 4% 
  • 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

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

Relative Valuation

  • P/NAV - Above +1SD for 1y; Above average for 3y and 5y
  • Dividend Yield - Average for 1y & 3y;  Below average for 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

The gross revenue and NPI have both improved as compared to the previous quarter. For the insurance claim on Festival Walk, the excess amount of S$ 3.5 mil (around 0.1 cents) would be distribute in the next semi-annual distribution. The current big news for MNACT would be the proposed merger with MCT. There are 2 scheme consideration options as below:

EGM is expected to be held in April. 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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REIT Investing Community - Facebook Group where members share and discuss REIT topic


*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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