Mapletree Commercial Trust Review @ 4 May 2022

Basic Profile & Key Statistics

• Main Sector(s): Office & Retail
• Country(s) with Assets: Singapore
• No. of Properties (exclude development/associate/fund): 5

Performance Highlight

Gross revenue, NPI, income available for distribution and DPU declined yoy due to lower contribution by VivoCity, MBC and Anson, but offset by higher contribution from mTower and MLHF. The DPU in 2H FY21/22 included S$ 15.7 mil of retention while the DPU for 2H FY20/21 include S$ 13mil of retention.

Shopper Traffic & Tenant Sales

The tenant sales from Jan to Mar 2022 have recovered to pre-Covid level despite shopper traffic being only at around 50% of pre-Covid level.

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
• WALE: Below median for more than 20%
• Highest lease expiry within 5 years: ± 5% from median; Falls in FY26/27 & beyond, without breakdown
• Weighted average land lease expiry: ± 10% from median

Debt Profile

• Gearing ratio: Below median for more than 10%
• Cost of debt: ± 10% from median
• Fixed rate debt %: Above median for more than 10%
• Unsecured debt %: Above median for more than 20%
• WADM: Above median for more than 20%
• Highest debt maturity within 5 years: Below median for more than 20%; Falls in FY24/25 and identical to FY26/27
• Interest coverage ratio: Above median for more than 10%

Diversification Profile

• Top geographical contribution: 100% from Singapore 
• 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 10% 
• Top 10 tenants' contribution: Below median for more than 20%

Key Financial Metrics

• Property yield: Below median for more than 10%
• Management fees over distribution: Below median for more than 20%; $8.40 distribution for every dollar paid 
• Distribution on capital: ± 10% from median
• Distribution margin: Above median for more than 20%

Trends

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

Relative Valuation

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

Author's Opinion

Favorable	Less Favorable
Diversified Sector	Short 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 Shareholding	Low Property Yield
Low Gearing Ratio	Property Yield Downtrend
High Fixed Rate Debt %	Distribution on Capital Downtrend
100% Unsecured Debt
Long WADM
Well Spread Debt Maturity
High Interest Coverage Ratio
Low Top Tenant & Top 10 Tenants Contributions
Competitive Management Fees
High Distribution Margin
NAV per Unit Uptrend

As compared to the previous 1H, the 2H performance has improved. With the recent relaxation of COVID-19 restrictions which allows the workforce to back to the office and border re-opening, MCT performance is expected to improve moving forward, albeit interest rate hikes remain a downside risk.

For the merger with Mapletree North Asia Commercial Trust, the EGM is to be held on 23rd May at 10 AM. Should the resolutions pass through, MCT would exercise a preferential offer to fund the additional cash requirement arising from the cash-only consideration. Below is the indicative timeline.

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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.