After market hours yesterday (27 April 2021), blue-chip REIT Mapletree Commercial Trust (SGX:N2IU) released its results for the second half, as well as for the full-year 2020/21 ended 31 March 2021.
I have gone through the documents that the REIT have posted and in today’s post, you will find a summary of the most important aspects to take note of relating to its financial performance, debt and portfolio occupancy profile, along with distribution payouts declared for the second half of the financial year. You will also read about my thoughts about the REIT’s latest set of results.
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:
As the REIT did not specifically report its results for the fourth quarter, I did some manual calculations based on the financial figures it reported for the third quarter (you can check out a summary I have written when the REIT posted its third quarter business update back in late-January 2021 here), and the financial figures reported for the second half of the financial year, and you can find the figures in the table below:
| Q4 FY2019/20 | Q4 FY2020/21 | % Variation | |
| Gross Revenue (S$’mil) | $127.3m | $130.3m | +2.3% |
| Property Operating Expenses (S$’mil) | $28.7m | $29.2m | +1.5% |
| Net Property Income (S$’mil) | $98.6m | $101.1m | +2.6% |
My Observations: Its top- and bottom-line results have recorded a slight quarter-on-quarter (q-o-q) growth after declining in the previous quarter, as Singapore gradually resumes normalcy after having successfully contained the Covid-19 pandemic.
2H FY2019/20 vs. 2H FY2020/21:
| 2H FY2019/20 | 2H FY2020/21 | % Variation | |
| Gross Revenue (S$’mil) | $258.7m | $260.3m | +0.6% |
| Property Operating Expenses (S$’mil) | $56.8m | $54.8m | -3.5% |
| Net Property Income (S$’mil) | $201.9m | $205.6m | +1.8% |
| Distributable Income to Unitholders (S$’mil) | $109.1m | $176.3m | +61.5% |
As a result of the government grants received, the REIT’s gross revenue for the second half of FY2020/21 edged up by 0.6% – otherwise, its gross revenue would have been down by 1.5% at S$257.6m. The slight improvements in the REIT’s gross revenue was also helped by contributions from the newly acquired Mapletree Business City II (MBC II), coupled with lower rental rebates granted to eligible tenants affected by Covid-19.
Property operating expenses also went down by 3.5% due to lower staff costs, property management expenses, utilities expenses, marketing and promotion expenses, and property management fees.
With improvements in its gross revenue and reduction in property operating expenses, the REIT’s net property income saw a slight gain of 1.8% compared to the same time period last year.
Finally, the big jump in its distributable income to unitholders was largely due to the REIT’s retention of S$43.7m of distribution by way of capital allowance claims and retention of capital distribution in Q4 FY2019/20, and also the release of S$13.0m from the retained cash carried forward from Q4 FY2019/20.
FY2019/20 vs. FY2020/21:
Finally, let us take a look at the REIT’s full-year results compared to the previous year in the table below:
| FY2019/20 | FY2020/21 | % Variation | |
| Gross Revenue (S$’mil) | $482.8m | $479.0m | -0.8% |
| Property Operating Expenses (S$’mil) | $104.9m | $102.0m | -2.8% |
| Net Property Income (S$’mil) | $377.9m | $377.0m | -0.2% |
| Distributable Income to Unitholders (S$’mil) | $243.2m | $314.7m | +29.4% |
Excluding the government grant, the REIT’s full-year gross revenue compared to last year would have been 1.5% lower at S$476.3m. Other reasons for the slight dip in the REIT’s gross revenue was mainly due to rental rebates granted to eligible tenants affected by Covid-19, as well as lower other income, partially offset by the full-year contribution from MBC II.
The 2.8% year-on-year (y-o-y) decline in the REIT’s property operating expenses was due to lower staff costs, property management expenses, utilities expenses, marketing and promotion expenses, property tax expense, and property management fees across all other properties.
Lastly, the REIT’s distributable amount to unitholders went up by 29.4% due to the retention of S$43.7m of distributable income in Q4 FY2019/20, along with the release of S$28.0m from retained cash.
Debt Profile (Q3 FY2020/21 vs. Q4 FY2020/21, and FY2019/20 vs. FY2020/21)
In this section, I will be looking at the REIT’s debt profile recorded as at 31 March 2021, and compare it against that recorded in the previous quarter three months ago (i.e. Q3 FY2020/21 ended 31 December 2020), as well as that recorded in the previous financial year (i.e. FY2019/20 ended 31 December 2020) to find out whether it has improved, remained consistent, or deteriorated:
Q3 FY2020/21 vs. Q4 FY2020/21:
| Q3 FY2020/21 | Q4 FY2020/21 | |
| Aggregate Leverage (%) | 34.0% | 33.9% |
| Interest Coverage Ratio (times) | 4.2x | 4.4x |
| Average Term to Debt Maturity (years) | 4.4 years | 4.2 years |
| Average Cost of Debt (%) | 2.5% | 2.5% |
My Observations: Compared to the previous quarter, the REIT’s debt profile more or less remained consistent.
FY2019/20 vs. FY2020/21:
| FY2019/20 | FY2020/21 | |
| Aggregate Leverage (%) | 33.3% | 33.9% |
| Interest Coverage Ratio (times) | 4.3x | 4.4x |
| Average Term to Debt Maturity (years) | 4.2 years | 4.2 years |
| Average Cost of Debt (%) | 2.9% | 2.5% |
My Observations: Apart from a slight reduction in the average cost of debt (by 0.4 percentage points, or pp, to 2.5%), along with a small increase in its aggregate leverage (even so, at 33.9%, there still remains plenty of debt headroom for the REIT to make further yield-accretive acquisitions before the regulatory limit of 50.0% is reached), the others remained more or less the same.
In the coming financial year 2021/22, only 2% of the REIT’s debt will be maturing, which is minimal in my opinion.
Personally, I felt that the REIT’s debt profile continues to remain resilient, and one I am comfortable with as a unitholder (of the REIT.)
Portfolio Occupancy Profile (Q3 FY2020/21 vs. Q4 FY2020/21, and FY2019/20 vs. FY2020/21)
Similar to how I have reviewed the REIT’s debt profile in the previous section, I too will be reviewing its portfolio occupancy profile recorded as at 31 March 2021, and compare it against that recorded 3 months ago (i.e. Q3 FY2020/21), as well as one year ago (i.e. FY2019/20):
Q3 FY2020/21 vs. Q4 FY2020/21:
| Q3 FY2020/21 | Q4 FY2020/21 | |
| VivoCity | 99.5% | 99.1% |
| Mapletree Business City I | 98.2% | 94.6% |
| Mapletree Business City II | 100.0% | 100.0% |
| mTower | 88.4% | 91.7% |
| Mapletree Anson | 100.0% | 100.0% |
| Merrill Lynch Harbourfront | 100.0% | 100.0% |
My Observations: Compared to the previous quarter, the biggest drop comes from MBC I, where its committed occupancy fell by 3.6pp to 94.6%. On the other hand, mTower (previously known as PSA Building) saw its occupancy rate improve by 3.3pp to 91.7%.
Personally, it is good to know that all of its properties continue to be more than 90.0% occupied.
FY2019/20 vs. FY2020/21:
| FY2019/20 | FY2020/21 | |
| VivoCity | 99.7% | 99.1% |
| Mapletree Business City I | 98.7% | 94.6% |
| Mapletree Business City II | 100.0% | 100.0% |
| mTower | 92.7% | 91.7% |
| Mapletree Anson | 100.0% | 100.0% |
| Merrill Lynch Harbourfront | 100.0% | 100.0% |
My Observations: Compared to a year ago, the occupancy rates of VivoCity, MBC I, and mTower weakened slightly. Despite of that, they still achieve an occupancy rate of above 90.0%, so I am not overly concerned.
In the coming financial year 2020/21, 11.4% and 12.5% of the retail and office/business park leases are up for renewal respectively.
Distribution Per Unit
For the second half of the financial year, the REIT have declared a distribution per unit of 5.32 cents/unit, a 57.9% jump from 3.37 cents/unit (comprising of 2.46 cents/unit paid out in the third quarter, and 0.91 cents/unit paid out in the fourth quarter) paid out in the same time period last year.
If you are a unitholder of Mapletree Commercial Trust, here are the dates on its distribution payout you need to take note of:
Ex-Date: 04 May 2021
Record Date: 05 May 2021
Payout Date: 04 June 2021
Finally, on a full-year basis, its distribution payout of 9.49 cents/unit is 18.6% more compared to the payout of 8.00 cents/unit in the previous financial year.
Closing Thoughts
Personally, as a unitholder, I felt that the REIT’s latest set of financial performance, debt and portfolio occupancy profile, is a pretty satisfactory one.
Moving forward, as Singapore gradually recovers from the Covid-19 pandemic, as long as there is no second wave of infection in the community, I am positive that the REIT’s results in the coming financial year ahead will be a better one than the current one under review.
With that, I have come to the end of my review of Mapletree Commercial Trust’s latest results. As always, I hope you have found the information presented within useful.
Related Documents
Disclaimer: At the time of writing, I am a unitholder of Mapletree Commercial Trust.
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