Mapletree North Asia Commercial Trust Review @ 20 April 2022

Basic Profile & Key Statistics

• Main Sector(s): Office & Retail
• Country(s) with Assets: China, Hong Kong, Japan & South Korea
• No. of Properties (exclude development/associate/fund): 13

Performance Highlight

For 2H FY21/22, gross revenue and NPI have improved due to contribution from HPB which was acquired in June 2021, lower rental relief as well as a lower finance costs. Coupled with the excess of insurance proceeds, the distributable income and DPU have improved as well.

Rental Reversion

Full-year rental reversion is negative for Festival Walk and Gateway Plaza, but positive for remaining properties. 

Footfall and Retail Sales

Due to the COVID-19 restriction implemented from 7 Jan, both footfall and tenant sales for Festival Walk have fallen from Jan 22 to Mar 22. 

Related Parties Shareholding

• REIT sponsor's shareholding: Above median for more than 20%
• REIT manager's shareholding: Above median for more than 20%
• Directors of REIT manager's shareholding: Above median for more than 20%

Lease Profile

• Occupancy: ± 5% from median
• Income in SGD/Major Currencies: Below median for more than 20%
• WALE: Below median for more than 20%
• Highest lease expiry within 5 years: Above median for more than 20%; Falls in FY23/24 
• Weighted Average Land Lease Expiry: Below median for more than 20%

Debt Profile

• Gearing ratio: Above median for more than 10%
• Gearing ratio includes perps: Above median for more than 10%
• Cost of debt: Below median for more than 20%
• Fixed rate debt %: ± 10% from median
• Unsecured debt %: ± 10% from median
• WADM:  ±10% from median
• Highest debt maturity within 5 years: Below median for more than 20%; Falls in FY24/25 
• Interest coverage ratio: ±10% from median

Diversification Profile

• Top geographical contribution: Below median for more than 10%
• Top property contribution: Above median for more than 20%
• Top 5 properties' contribution: Above median for more than 20%
• Top tenant contribution: Below median for more than 20%
• Top 10 tenants' contribution: ± 10% from median

Key Financial Metrics

• Property yield: Below median for more than 20%
• Management fees over distribution: Below median for more than 20%; $10 distribution for every dollar paid 
• Distribution on capital: Below median for more than 10%
• Distribution margin: Above median for more than 10%

Trends

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

Relative Valuation

• P/NAV: Above +2SD for 1y; Above +1SD for 3y & 5y
• Dividend Yield: Below -1SD for 1y, 3y & 5y

Author's Opinion

Favorable	Less Favorable
Diversified Sector	Low Income in SGD/Major Currencies
High REIT Sponsor's Shareholding	Short WALE
High REIT Manager's Shareholding	Concentrated Lease Expiry
High Directors of REIT Manager's Shareholding	Short Weighted Average Land Lease Expiry
Low Cost of Debt	High Gearing Ratio
Well Spread Debt Maturity	High Top Property & Top 5 Properties Contributions
Low Top Geographical Contribution	Low Property Yield
Low Top Tenant Contribution	Low Distribution on Capital
Competitive Management Fees	DPU Downtrend
High Distribution Margin	Property Yield Downtrend
	Distribution on Capital Downtrend

The performance for the latest quarter has been impacted by mainly Festival Walk due to the COVID-19 restriction. In the presentation, it is mentioned that there has not been any significant impact on Sand Plaza amid the lockdown in Shanghai. The depreciation of JPY recently would be another concern that could impact the upcoming performance as well.

For the merger with Mapletree Commercial Trust, MCT has offered the 3rd option, cash-only consideration in March. 

The EGM for both MCT and MNACT are expected to be held by the end of May. Should the merger resolutions pass through, then the settlement of scheme consideration and delisting are expected to be completed by the end of August. 

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.