Retail and office REIT Mapletree Commercial Trust (SGX:N2IU) held its 9th annual general meeting for the financial year 2019/20 ended 31 March 2020 via virtual means this afternoon, which I have attended as a unitholder.
It was a short-and-sweet meeting, lasting just slightly over 30 minutes. For the benefit of those who weren’t able to attend, you’ll find a summary of the presentation by Ms Janica Teo (Chief Financial Officer), and Ms Sharon Lim (Chief Executive Officer) which I’ve compiled in this post:
Financial Results (FY2018/19 vs. FY2019/20)
- Gross Revenue: Up 8.8% to S$482.8m (FY2018/19: S$443.9m)
- Property Operating Expenses: Up 9.0% to S$104.9m (FY2018/19: S$96.3m)
- Net Property Income: Up 8.7% to S$377.9m (FY2018/19: S$347.6m), contributed by MBC II, which was acquired on 01 November 2019
- Distribution to Unitholders: Down 7.9% to S$243.2m (FY2018/19: S$264.0m), due to the REIT retaining S$43.7m of distribution in the fourth quarter to better position themselves to deal with uncertainties relating to Covid-19
- Distribution Per Unit: Down 12.5% to 8.00 cents/unit (FY2018/19: 9.14 cents/unit)
Debt Profile (FY2018/19 vs. FY2019/20)
- Gearing Ratio: 33.3% (FY2018/19: 33.1%)
- Interest Coverage Ratio: 4.3x (FY2018/19: 4.5x)
- Average Term to Maturity of Debt: 4.2 years (FY2018/19: 3.6 years)
- Weighted Average All-in Cost of Debt: 2.94% (FY2018/19: 2.97%)
- A total of 78.9% of the REIT’s debt are at fixed rates/interest rate swaps
- Ms Teo updated that there are sufficient facilities in place to refinance borrowings due in the next 2 financial years (i.e. in FY2020/21 and FY2021/22)
Portfolio Occupancy Profile (as at 31 March 2020)
The REIT’s occupancy for each property is as follows:
- VivoCity: 99.7% (higher than average occupancy rate of 90.8% islandwide)
- MBC I: 98.7%
- MBC II: 100.0%
- PSA Building: 92.7% (Ms Lim updated that of the six floors which will be vacated by PSA Corporation Limited, four floors have been committed, and marketing is ongoing for the remaining two floors)
- Mapletree Anson: 100.0%
- MLHF: 100.0%
The REIT’s WALE is as follows:
- Portfolio: 2.6 years
- Retail: 2.2 years
- Office/Business Park: 2.9 years
Additionally, the REIT have achieved a positive rental reversion of +5.0% for FY2019/20.
Key Highlight – Acquisition of MBC II
- Ms Lim shared that the acquisition is NPI-, DPU-, as well as NAV-accretive
- Some of the tenants include Google, Medtronics Asia Pacific, as well as HSBC
VivoCity – 5th AEI
Ms Lim highlighted that VivoCity’s fifth AEI, which saw a changeover of hypermarket (from Giant to NTUC Fairprice), along with conversion of 24,000 sq ft of recovered anchor space to accommodate expanding tenants (one of which being Uniqlo located in Level 1), and new tenants (in Basement 2) benefitted the mall both quantitatively (the AEI resulted in a positive rental uplift and approximately 40% of ROI) as well as qualitatively (where a refreshed concept and the widening of the mall’s offerings strengthened its appeal.)
Pipeline of Right of First Refusal Properties
- HarbourFront Centre
- HarbourFront Tower One
- HarbourFront Tower Two
- St James Power Station
- PSA Vista
- SPI Development Site
Mitigating Impact from Covid-19
- Since February to date, Ms Teo updated that the REIT have helped eligible retail tenants offset close to 4 months of fixed rent over March to July 2020, allowing them to plan ahead
- The REIT have also rolled out a series of safe distancing measures to safeguard the well-being of shoppers, tenants, staff, and the local community
Just to update – when I registered to attend the AGM back when its annual report was released, I submitted a couple of questions – the status of the REIT filling the vacancy left by PSA Corporation Limited (in PSA Building), whether or not the building “PSA Building” will be renamed, and also whether or not there are any plans for the REIT to divest geographically.
The first question was updated by Ms Lim during her presentation above; for the second question, I understand from the Q&A document that the building will be renamed and the new name will be decided and announced in due course; for the third and final question, from the Q&A document, I understand that the REIT will remain focused in Singapore for now.
At the time of writing, Singapore is currently in Phase Two of re-opening after a two-month circuit breaker period (between 07 April and 01 June 2020), where retail shops can resume their businesses and F&B outlets can once again allow dining ins, albeit with safe distancing measures in place – I am of the opinion that the worst (in terms of the declining shopper traffic and retail sales in VivoCity) is beyond us, and that we will see gradual improvements from the second quarter of FY2020/21 onward (the first quarter results, which will be released after trading hours on 23 July 2020 will be a relatively weak one – as the period under review, between 01 April and 30 June 2020 encompasses the 2-month circuit breaker period.)
As far as the REIT’s other office and business park properties are concerned, I am confident that it will continue to remain resilient.
To sum up, I am confident of the REIT’s management in navigating the REIT through the Covid-19 headwinds, and emerging stronger at the end of it.
- AGM Presentation Slides
- Questions (Raised by Unitholders) and Answers (by the REIT’s Management)
- AGM Results
Disclaimer: At the time of writing, I am a unitholder of Mapletree Commercial Trust.
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