Mapletree Commercial Trust (SGX:N2IU), with retail and office properties in Singapore, released its business update for the third quarter and for the first 9-months of the financial year 2020/21 ended 31 December 2020 after market hours yesterday (27 January 2021.)

As a unitholder of the blue-chip REIT, I have studied the updates and in this post, you will find the most important pointers about its key financial performance, along with its portfolio occupancy and debt profile to take note of. You will also find my personal thoughts about the REIT’s latest business update, along with my outlook in the quarters ahead.

Financial Performance (Q3 FY2019/20 vs. Q3 FY2020/21, and 9M FY2019/20 vs. 9M FY2020/21)

Q3 FY2019/20 vs. Q3 FY2020/21:

The following table is the REIT’s financial performance on a quarter-on-quarter (q-o-q) basis, which I have computed based on its latest year-on-year (y-o-y) results, along with results posted for the previous quarters:

Q3 FY2019/20Q3 FY2020/21% Variance
Gross Revenue
(S$’mil)		$131.3m$130.0m-1.0%
Property Operating
Expenses (S$’mil)		$28.0m$25.6m-8.7%
Net Property
Income (S$’mil)		$103.3m$104.4m+1.1%

My Thoughts: Bearing in mind that in Q3 FY2019/20 (period between 01 October and 31 December 2019) is before the outbreak of the Covid-19 pandemic, and in the current quarter under review (i.e. Q3 FY2020/21 between 01 October and 31 December 2020), Singapore is largely in Phase 2 of the safe re-opening, looking at its gross revenue, it is encouraging to note that on a q-o-q basis, it only dipped by a mere 1.0% – very close to pre-pandemic levels. This can be attributed to the contributions from Mapletree Business City II.

Another thing to note is its net property income, which saw a slight q-o-q improvement.

With a positive set of q-o-q results, I am personally of the opinion that its fourth quarter results will be a better one on a q-o-q basis, considering that Singapore have since moved into Phase 3 of the safe re-opening (with effect from 28 December 2020) and as normalcy slowly returns.

9M FY2019/20 vs. 9M FY2020/21:

9M FY2019/209M FY2020/21% Variance
Gross Revenue
(S$’mil)		$355.5m$348.7m-1.9%
Property Operating
Expenses (S$’mil)		$76.1m$72.8m-4.4%
Net Property
Income (S$’mil)		$279.4m$275.9m-1.2%

On a y-o-y basis, the REIT’s gross revenue and net property income fell by 1.9% and 1.2% respective due to Covid-19 rental rebates provided to eligible tenants, but offset by contributions from Mapletree Business City II.

My Thoughts: Just like its q-o-q results I’ve talked about earlier, I’m equally impressed by the REIT’s latest set of y-o-y results. Personally, I am optimistic that the REIT’s full-year results for FY2020/21 ended 31 March 2021 will be either on par, or slightly better than results compared to the year before (i.e. FY2019/20) – this is provided if the number of community cases of Covid-19 in Singapore continue to be in low single digits, and there’s no further re-tightening of any measures needed by the Singapore government.

Portfolio Occupancy Profile (Q2 FY2020/21 vs. Q3 FY2020/21, and Q3 FY2019/20 vs. Q3 FY2020/21)

In this section, I will be looking at the REIT’s portfolio occupancy (breakdown by individual properties), where I will be looking at how it has improved/deteriorated compared to the previous quarter three months ago (i.e. Q2 FY2020/21 ended 30 September 2020), and also compared to the same time period last year (i.e. Q3 FY2019/20 ended 31 December 2019):

Q2 FY2020/21 vs. Q3 FY2020/21:

Q2 FY2020/21Q3 FY2020/21
VivoCity97.9%99.5%
Mapletree Business
City I		98.2%98.2%
Mapletree Business
City II		100.0%100.0%
mTower*87.9%88.4%
Mapletree Anson100.0%100.0%
Merrill Lynch
Harbourfront		100.0%100.0%
* mTower was previously known as PSA Building

My Thoughts: I’m encouraged to note the increase in occupancy rate in VivoCity 3 months on, as the retail sector gradually recovers as Singapore loosens some of the safe distancing restrictions. As for the REIT’s other properties, in my opinion, their occupancy rates continue to remain resilient.

Q3 FY2019/20 vs. Q3 FY2020/21:

Q3 FY2019/20Q3 FY2020/21
VivoCity100.0%99.5%
Mapletree Business
City I		99.7%98.2%
Mapletree Business
City II		100.0%100.0%
mTower*90.6%88.4%
Mapletree Anson99.0%100.0%
Merrill Lynch
Harbourfront		100.0%100.0%
* mTower was previously known as PSA Building

My Thoughts: Compared to the same time period last year (i.e. Q3 FY2019/20 ended 31 December 2019), which was before the pandemic, even though the REIT’s portfolio occupancy was slightly lower, but considering how Covid-19 have disrupted the retail sector (largely due to the 2-month ‘circuit breaker’ period implemented by the Singapore government to stop the further community spread of Covid-19 in the country) as well as the office sector (albeit to a smaller extent, due to office downscaling their operations as they continue to allow their staffs to work from home), it is considered to be very resilient, and one I’m satisfied with.

Also, just like its financial performance, I am of the opinion that the REIT’s portfolio occupancy profile is likely to record further improvements in the quarters to come as normalcy slowly resumes.

Debt Profile (Q3 FY2019/20 vs. Q3 FY2020/21)

Finally, let us take a look at the REIT’s debt profile, where I will be comparing with the statistics reported in the current quarter under review (i.e. Q3 FY2020/21 ended 31 December 2020) to that reported a year before (i.e. Q3 FY2019/20 ended 31 December 2019) to find out whether it has improved or deteriorated:

Q3 FY2019/20Q3 FY2020/21
Aggregate Leverage
(%)		33.4%34.0%
Interest Coverage
Ratio (times)		4.4x4.2x
Average Term to
Debt Maturity (years)		4.4 years4.4 years
Average Cost of
Debt (%)		3.0%2.5%

My Thoughts: On the whole, I must say that even during the pandemic, its debt profile have continued to remain stable (which I like) – one positive thing to note here is that its average cost of debt have even fell by 0.5 percentage points to 2.5%.

No doubt its aggregate leverage have went up slightly (to 34.0%), but it is still a safe distance away from the 50.0% regulatory limit.

In Conclusion

There’s nothing not to dislike about the blue-chip REIT’s latest business updates. As a unitholder, I am happy to note that its financial performance and portfolio occupancy profile have almost recovered to pre-Covid levels. Also, its debt profile have remained stable compared to the same time period last year, which was before the pandemic – which makes it all the more impressive.

Finally, there are no distributions to unitholders declared by the REIT for the current quarter under review, as they have changed to paying out a distribution on a semi-annual basis (i.e. when they release their second and fourth quarter results.)

Related Documents

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

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