Mapletree Commercial Trust (SGX:N2IU), a blue-chip REIT, and also a REIT in my long-term investment portfolio (you can check out my entire investment portfolio here), release its fourth quarter as well as full-year results for financial year 2020 ended 31 March 2020 after trading hours yesterday (22 April.)

I have gone through the REIT’s latest set of financial results, portfolio occupancy profile, debt profile, as well as the press release to find out what the CEO of the REIT have to say and in this post, you’ll find key summaries of it, along with my personal thoughts:

Financial Results (Q4 FY2018/19 vs. Q4 FY2019/20, and FY2018/19 vs. FY2019/20):

Q4 FY2018/19 vs. Q4 FY2019/20:

Q4
FY2018/19		Q4
FY2019/20		% Variance
Gross Revenue
(S$’mil)		$112.9m$127.3m+12.8%
Property Operating
Expenses (S$’mil)		$25.3m$28.7m+13.5%
Net Property
Income (S$’mil)		$87.6m$98.6nm+12.6%
Distributable Income
to Unitholders
(S$’mil)		$66.9m$30.1m-55.0%

Personally, I felt that the 55.0% quarter-on-quarter (q-o-q) drop in its distributable income to unitholders was largely within my expectation, due to the Covid-19 situation in the country, and that it is natural for the REITs to opt to retain some capital for the challenges ahead.

Other than that, the REIT’s gross revenue and net property income both saw q-o-q improvements – this was largely due to contributions from the newly acquired Mapletree Business City II in November 2019.

Finally, the REIT’s property operating expenses was also up by 13.5% on a q-o-q basis, as a result of the inclusion of property operating expenses of the newly acquired Mapletree Business City II, along with higher marketing and promotional expenses incurred by existing properties.

FY2018/19 vs. FY2019/20:

FY2018/19FY2019/20% Variance
Gross Revenue
(S$’mil)		$443.9m$482.8m+8.8%
Property Operating
Expenses (S$’mil)		$96.3m$104.9m+9.0%
Net Property
Income (S$’mil)		$347.6m$377.9m+8.7%
Distributable Income
to Unitholders
(S$’mil)		$264.0m$243.2m-7.9%

The REIT’s distributable income to unitholders saw a 7.9% year-on-year (y-o-y) decline, attributable to a huge 55.0% decline in Q4 FY2019/20 (with reasons explained earlier.)

Other than that, for the year, the REIT’s gross revenue and net property income both saw y-o-y improvements as a result of contribution from Mapletree Business City II (acquired in 01 November 2019), along with higher contributions from Mapletree Business City I, and Merrill Lynch Harbourfront, offset by lower contribution from VivoCity, PSA Building, and Mapletree Anson.

My Thoughts: I am satisfied with the REIT’s latest quarter and full-year results. The decline in its distributable income to unitholders, as I mentioned earlier, was within my expectations as a result of headwinds relating to Covid-19 outbreak in Singapore (particularly from the Circuit Breaker measures implemented by the Singapore government from 07 April 2020.)

Portfolio Occupancy Profile (Q3 FY2019/20 vs. Q4 FY2019/20):

In this section, I will be looking at the REIT’s portfolio occupancy profile for the latest quarter (i.e. Q4 FY2019/20), and compare it against its portfolio occupancy profile in the last quarter (i.e. Q3 FY2019/20), to find out whether it has improved/declined:

Q3
FY2019/20		Q4
FY2019/20
Portfolio Occupancy
(Committed) (%)		98.9%98.7%
Rental Reversion – Retail
(%)		+6.7%+6.7%
Rental Reversion
– Office/Business Park
(%)		+0.7%+0.7%
Portfolio WALE
(years)		2.6 years2.6 years

My Thoughts: Looking at the table above, Mapletree Commercial Trust’s portfolio occupancy profile have remained resilient.

Debt Profile (Q3 FY2019/20 vs. Q4 FY2019/20):

Just like how I look at the REIT’s portfolio occupancy profile, I will also be comparing the REIT’s most recent debt profile for Q4 FY2019/20, against its debt profile recorded in the previous quarter (i.e. Q3 FY2019/20), to find out whether or not it has recorded improvements (or have weakened):

Q3
FY2019/20		Q4
FY2019/20
Gearing Ratio
(%)		33.4%33.3%
Interest Coverage
Ratio (times)		4.4x4.3x
Average Term to
Debt Maturity (years)		4.4 years4.2 years
Average Cost of Debt
(years)		2.96%2.94%

My Thoughts: Compared with the previous quarter, Mapletree Commercial Trust’s debt profile remains more or less the same.

Distribution Per Unit Payout to Unitholders (Q4 FY2018/19 vs. Q4 FY2019/20, and FY2018/19 vs. FY2019/20):

Finally, let us take a look at the REIT’s distribution payout to unitholders for the current quarter (and compare it with the same quarter last year), as well as the total distribution payouts for this financial year (compared against the last):

Q4 FY2018/19 vs. Q4 FY2019/20:

Q4
FY2018/19		Q4
FY2019/20		% Variance
Distribution Per
Unit (S$’cents)		2.31 cents0.91 cents-60.6%

The REIT’s distribution payout in the latest quarter under review (i.e. Q4 FY2019/20) have shrunk 60.6% q-o-q to 0.91 cents/unit, with the ex-date on 29 April, record date on 30 April, and payout date on 29 May.

FY2018/19 vs. FY2019/20:

FY2018/19FY2019/20% Variance
Distribution Per
Unit (S$’cents)		9.14 cents8.00 cents-12.5%

As a result of a 60.6% drop in the REIT’s distribution payouts in the fourth quarter, its payouts, on a y-o-y basis, saw a 12.5% decline.

Note: The REIT will be reporting its financial results from FY2020/21 onwards on a half-yearly basis. As such, it will be declaring distribution payouts to unitholders on a half-yearly basis as well (previously it had been declaring distribution payouts to unitholders on a quarterly basis.)

Summary from CEO of Mapletree Commercial Trust, Ms Sharon Lim:

  • The tighter measures implemented by the Singapore government to combat the Covid-19 outbreak in the country has impacted retail footfall and sales in VivoCity. This, coupled with rental assistance rolled out by the REIT to support their retail tenants, weighted down VivoCity’s Q4 FY2019/20 performance.
  • As there remains a great degree of uncertainty over the duration and severity of Covid-19 situation in Singapore, and when normalcy can resume, the REIT have decided to retain S$43.7m of distribution by way of capital allowance claims and capital retention in Q4 FY2019/20 to help them better position themselves for the challenges ahead.

In Conclusion:

I am satisfied with the REIT’s most recent set of financial results, portfolio occupancy, and debt profile.

The drop in the REIT’s distribution per unit is, in my opinion, a temporary one, which I am sure everything will recover (in fact, I am even confident of the REIT increasing its distribution to unitholders in the future) once the Covid-19 ends, and everything returns back to normalcy once again.

At this point in time, I will continue to remain invested in the REIT, and am looking forward to reading the REIT’s annual report (and will provide a summary of it in due course), as well as attending its upcoming AGM for FY2019/20.

Download Your Copy of Mapletree Commercial Trust’s Q4 and Full-Year 2019/20 Financial Results, Presentation, and Press Release Here:

Disclaimer: At the time of writing, I am a unitholder of Mapletree Commercial Trust.

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