Following Mapletree Logistics Trust’s results release on Wednesday (you can check out a summary I have written here), the second Mapletree REIT in Mapletree North Asia Commercial Trust (SGX:RW0U) released its results for the second half, as well as for full-year of 2020/21 ended 31 March 2021 after trading hours yesterday (22 April 2021.)

As the office and retail REIT is also in my long-term investment portfolio (you can check out a list of companies I have invested in here), I have studied it in detail and in this post, you will find the most important aspects about its latest financial results, debt and portfolio occupancy profile, as well as its distribution payout to unitholders you need to take note of. On top of that, you will also find my thoughts about the REIT’s latest set of results as a unitholder to share.

Let’s begin.

Financial Performance (Q4 FY2019/20 vs. Q4 FY2020/21, 2H FY2019/20 vs. 2H FY2020/21, and FY2019/20 vs. FY2020/21)

Q4 FY2019/20 vs. Q4 FY2020/21:

While the REIT did not specifically report its fourth quarter results, I’ve done my own calculations based on the figures provided for the third quarter (ended 31 December 2020), and figures provided for the second half of the financial year (period between 01 October 2020 and 31 March 2021.)

In the table below, you will find the key financial figures I’ve computed for the fourth quarter of FY2020/21, compared against the figures reported in the same time period last year (i.e. fourth quarter of FY2019/20):

Q4 FY2019/20Q4 FY2020/21% Variation
Gross Revenue
(S$’mil)
$76.8m$100.6m+31.0%
Net Property
Income (S$’mil)
$56.9m$76.6m+34.6%

My Thoughts: It is good to note that both the top- and bottom-line have recorded an improved set of results, which can be attributed to contributions from the newly acquired mBAY POINT Makuhari (MBP) and Omori Prime Building (Omori) on 28 February 2020.

2H FY2019/20 vs. 2H FY2020/21:

Next, let us take a look at the REIT’s financial performance for the second half of the financial year 2020/21 (period between 01 October 2020 and 31 March 2021), compared against results reported in the same time period last year (i.e. second half of the financial year 2020/21 between 01 October 2019 and 31 March 2020):

2H FY2019/202H FY2020/21% Variation
Gross Revenue
(S$’mil)
$144.1m$201.3m+39.7%
Net Property
Income (S$’mil)
$107.7m$152.3m+41.4%
Distributable
Income to
Unitholders (S$’mil)
$104.1m$113.3m+8.8%

Again, it is another improved set of results reported by the REIT.

The 39.7% improvement in its gross revenue can be attributed to contributions from the newly acquired MBP and Omori, as well as lower rent reliefs granted to tenants of Festival Walk.

In-line with improvements in its gross revenue, the REIT’s net property income and its distributable income to unitholders also went up by 41.4% and 8.8% respectively.

FY2019/20 vs. FY2020/21:

The following table is a comparison of the REIT’s financial results reported for the full-year of 2020/21 ended 31 March 2021 compared against that reported a year ago (i.e. full-year of 2019/20 ended 31 March 2020):

FY2019/20FY2020/21% Variation
Gross Revenue
(S$’mil)
$354.5m$391.4+10.4%
Net Property
Income (S$’mil)
$277.5m$292.0m+5.2%
Distributable
Income to
Unitholders (S$’mil)
$227.9m$210.2m-7.8%

From the table above, you can see that its year-on-year (y-o-y) results is a bit of a mixed bag – where its gross revenue and net property income recording improvements (due to a full-year contribution from MBP and Omori, along with higher average rates of HKD, JPY, and RMB against SGD), but its distributable income to unitholders recording a slight decline after taking into account the distribution adjustments.

Debt Profile (Q3 FY2020/21 vs. Q4 FY2020/21, and FY2019/20 vs. FY2020/21)

Moving on, let us take a look at the REIT’s debt profile, where I will be looking at the statistics reported for the quarter ended 31 March 2021 (which is the fourth quarter and the full year of 2020/21), compared against that recorded in the previous quarter three months ago (i.e. Q3 FY2020/21 ended 31 December 2020), and also against the previous financial year 2019/20 (ended 31 March 2020) to find out whether or not it has strengthened or weakened:

Q3 FY2020/21 vs. Q4 FY2020/21:

Q3 FY2020/21Q4 FY2020/21
Aggregate Leverage
(%)
41.3%41.5%
Interest Coverage
Ratio (times)
3.4x3.7x
Average Term to
Debt Maturity (years)
3.2 years3.1 years
Average Cost of
Debt (%)
2.0%2.0%

My Thoughts: Compared to its debt profile recorded 3 months ago, it has more or less remained consistent.

FY2019/20 vs. FY2020/21:

FY2019/20FY2020/21
Aggregate Leverage
(%)
39.3%41.5%
Interest Coverage
Ratio (times)
2.8x3.7x
Average Term to
Debt Maturity (years)
3.4 years3.1 years
Average Cost of
Debt (%)
2.3%2.0%

My Thoughts: On a y-o-y basis, the REIT’s debt profile is a mixed bag – while it is good to note that the average cost of debt have declined slightly by 0.3 percentage points (pp), and also because of that, its interest coverage ratio have improved to 3.7x, on the other hand, its aggregate leverage have increase by another 2.2pp to 41.5% – which happen to be the highest since the REIT was listed. I will be raising a question to the management to find out whether or not there are any plans to improve on this particular statistic in its upcoming AGM.

Portfolio Occupancy Profile (Q3 FY2020/21 vs. Q4 FY2020/21)

In the table below, you will find the REIT’s portfolio occupancy profile for the current quarter under review (i.e. Q4 FY2020/21 ended 31 March 2021) compared against its portfolio occupancy profile recorded three months ago (i.e. Q3 FY2020/21 ended 31 December 2020) to find out if it has improved or deteriorated:

Q3 FY2020/21Q4 FY2020/21
Festival Walk (Retail):
Occupancy Rate
Rental Reversion

98.9%
-17.0%

99.9%
-21.0%
Festival Walk (Office):
Occupancy Rate
Rental Reversion

100.0%
N.A.*

100.0%
N.A.*
Gateway Plaza:
Occupancy Rate
Rental Reversion

92.2%
-9.0%

92.9%
-7.0%
Sandhill Plaza:
Occupancy Rate
Rental Reversion

96.9%
+8.0%

97.9%
+5.0%
Japan Properties:
Occupancy Rate
Rental Reversion

97.8%
+5.0%

97.8%
+2.0%
The Pinnacle Gangnam:
Occupancy Rate

89.6%

96.5%

* N.A. – no leases up for renewal in FY2020/21.

My Thoughts: Looking at the REIT’s portfolio occupancy profile for the current quarter under review against that recorded in the previous quarter, it has largely been positive – where portfolio occupancy rates of most of its properties have improved. Another thing to note is that Sandhill Plaza and Japan Properties have continued to record positive rental reversions.

However, one thing to note is that most of the rental reversions have declined compared to three months ago.

Distribution Per Unit

For the second half of the financial year 2020/21 under review, the REIT have declared a distribution payout of 3.299 cents/unit – compared to its payout of 3.237 cents/unit in the same time period last year (which comprised of 1.671 cents/unit paid out in Q3 FY2019/20, as well as 1.566 cents/unit paid out in Q4 FY2019/20), its distribution payout saw an improvement of 1.9%.

If you are a unitholder of the REIT, you may want to take note of the following dates:

Ex-Date: 29 April 2021
Record Date: 30 April 2021
Payout Date: 21 June 2021

Finally, on a y-o-y basis, the REIT’s total distribution payout fell by 13.3% to 6.175 cents/unit (FY2019/20: 7.124 cents/unit.)

In Conclusion

Definitely, there are signs of recovery in place for the REIT in terms of its financial performance, as well as in its portfolio occupancy rate (which have increased for all of its properties.)

On the other hand, I am concerned that its aggregate leverage of 41.5% is the highest recorded since its IPO – and as I’ve mentioned earlier in this post, I will be submitting a question to find out whether there are any plans in place to bring down this statistic during the REIT’s AGM.

With that, I have come to the end of my review of Mapletree North Asia Commercial Trust’s latest set of results. Here’s wishing you a wonderful weekend ahead with your loved ones!

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