Mapletree Commercial Trust (SGX:N2IU), a constituent of Singapore’s benchmark Straits Times Index (STI), with a total of 5 retail and office properties located in Singapore (in particular, all but one of its properties are located in the Harbourfront precinct, which will benefit from the Singapore Government’s upcoming “Greater Southern Waterfront” plan), have released its full-year results for the financial year ended 31 March 2022 (i.e. FY2021/22) after market hours this evening (20 March 2022.)

As a unitholder of the Mapletree REIT, I have studied the documents posted and in this post, you’ll find my review about its latest set of financial results, portfolio occupancy and debt profile, and its distribution payout to unitholders.

Let’s begin:

Financial Performance (FY2020/21 vs. FY2021/22, 2H FY2020/21 vs. FY2021/22, and Q4 FY2020/21 vs. Q4 FY2021/22)

In this section on the REIT’s financial performance, I will be reviewing it from various angles – first on a full-year basis (i.e. FY2020/21 vs. FY2021/22), followed by on a half-yearly basis (i.e. 2H FY22020/21 vs. 2H FY2021/22), and finally on a quarterly basis (i.e. Q4 FY2020/21 vs. Q4 FY2021/22 – which I have manually computed based on its results reported in the previous quarters):

FY2020/21 vs. FY2021/22:

The following table is the REIT’s financial performance for the current financial year under review (i.e. FY2021/22 ended 31 March 2022) compared against the previous financial year (i.e. FY2020/21 ended 31 March 2021):

FY2020/21FY2021/22% Variance
Gross Revenue
(S$’mil)
$479.0m$499.5m+4.3%
Property Operating
Expenses (S$’mil)
$102.0m$110.8m+8.6%
Net Property
Income (S$’mil)
$377.0m$388.7m+3.1%
Distributable
Income to
Unitholders (S$’mil)
$314.7m$317.0m+0.7%

On a full-year basis, its results for the current financial year under review compared to the previous financial year saw slight improvements in its top- and bottom-line – particularly, the 4.3% growth in its gross revenue was attributed to higher contribution across all of the REIT’s properties (except for Mapletree Anson due to transitional vacancy.) This resulted in its net property income to record a 3.1% growth.

Property expenses went up by 8.6% compared to last year due to higher staff costs (mainly due to grants received from the Government in FY2020/21 under the job support scheme), property maintenance expenses, utilities expenses, marketing and promotion expenses, property tax expenses (mainly due to annual values assessed and the property tax rebates received from the Government in the previous financial year 2020/21), and property management fees.

2H FY2020/21 vs. 2H FY2021/22:

Next, let us take a look at its financial performance posted for the 2nd half of the current financial year (i.e. 2H FY2021/22, between 01 Oct 2021 and 31 March 2022), compared against the same time period last year (i.e. 2H FY2020/21, between 01 October 2020 and 31 March 2021):

2H FY2020/212H FY2021/22% Variance
Gross Revenue
(S$’mil)
$260.3m$255.6m-1.8%
Property Operating
Expenses (S$’mil)
$54.8m$56.9m+3.9%
Net Property
Income (S$’mil)
$205.6m$198.8m-3.3%
Distributable
Income to
Unitholders (S$’mil)
$176.3m$170.5m-3.3%

On a half-yearly basis, however, the REIT’s financial results was a weaker one – the 1.8% decline in its gross revenue was due to lower contribution by VivoCity (due to the absence of cash grant received in 2H FY2020/21, and also the reclassification of property tax rebate received from Government passed on to eligible tenants in FY2019/20, offset by compensation sum received from the pre-termination of leases and higher carpark income), Mapletree Business City (mainly due to lower rental income from lower occupancy, absence of cash grant received in the same time period last year, as well as lower carpark income, offset by effects of step-up rents in existing leases, positive rental escalation, and compensation sum received from pre-termination of leases), as well as Mapletree Anson (due to lower rental income from transitional vacancy, partially offset by effects of step-up rents in existing leases), along with the absence of a net government grant of $2.7m given out in the previous financial year 2020/21 relating to the 15% property tax rebate received from the Government for which corresponding disbursement was made to eligible tenants in advance in FY2019/20. Accordingly, its net property income also slipped by 3.3%.

The 3.9% increase in the REIT’s property operating expenses was due to higher operation and maintenance expenses, staff costs, marketing and promotion expenses, and provision for doubtful debts, partially offset by lower property taxes expenses and property management fees.

Q4 FY2020/21 vs. Q4 FY2021/22:

Finally, let us take a look at the REIT’s results on a quarter-on-quarter (q-o-q) basis. As I’ve mentioned in earlier in this section, the figures below are manually computed (by me) based on results it has posted in the previous quarters:

Q4 FY2020/21Q4 FY2021/22% Variance
Gross Revenue
(S$’mil)
$130.3m$125.5m-3.7%
Property Operating
Expenses (S$’mil)
$29.2m$28.1m-3.7%
Net Property
Income (S$’mil)
$101.1m$97.4m-3.7%

On a q-o-q basis, its top- and bottom-line also fell, and from what I can gather from its results in the second half of the financial year, it is due to the lack of one-off Government grants given out in the previous financial year.

Portfolio Occupancy Profile (Q3 FY2021/22 vs. Q4 FY2021/22)

Moving on, let us take a look at the REIT’s portfolio occupancy profile – where I will be comparing the statistics recorded for the current quarter under review (i.e. Q4 FY2021/22 ended 31 March 2022) against that recorded in the previous quarter 3 months ago (i.e. Q3 FY2021/22 ended 31 December 2021) to find out whether they have continued to remain resilient:

Q3 FY2021/22Q4 FY2021/22
Portfolio Occupancy
(Committed) (%)
96.3%97.0%
Portfolio WALE
(years)
2.7 years2.6 years

My Observations: The REIT’s portfolio occupancy saw a 0.7 percentage point (pp) improvement, contributed by improvement in occupancy rates in all of its properties, as follows:

  • VivoCity – Up from 98.9% in Q3 FY2021/22 to 99.2% in Q4 FY2021/22
  • Mapletree Business City – Up from 96.7% in Q3 FY2021/22 to 97.3% in Q4 FY2021/22
  • mTower – Up from 87.6% in Q3 FY2021/22 to 88.0% in Q4 FY2021/22
  • Mapletree Anson – Up from 95.9% in Q3 FY2021/22 to 100.0% in Q4 FY2021/22
  • Merrill Lynch Harbourfront – Maintained at 100.0% in both Q3 and Q4 FY2021/22

As far as the REIT’s portfolio lease expiries are concerned, they are quite well spread out over the year – particularly in the coming FY2022/23, only 9.1% and 10.3% of the retail and office/business park rentals are expiring respectively – which is quite a small percentage in my opinion.

Debt Profile (Q3 FY2021/22 vs. Q4 FY2021/22)

Just like how I have reviewed the blue-chip REIT’s portfolio in the previous section, in the table below, you’ll find my review of its debt profile by taking the statistics reported for the current quarter compared against the previous quarter:

Q3 FY2021/22Q4 FY2021/22
Aggregate Leverage
(%)
34.1%33.5%
Interest Coverage
Ratio (times)
4.8x4.8x
Average Term to
Debt Maturity (years)
3.5 years3.3 years
Average Cost of
Debt (%)
2.4%2.4%

My Observations: The REIT’s debt profile is more or less unchanged compared to the previous quarter, and continues to remain healthy in my opinion – its aggregate leverage, at 33.5% as at 31 March 2022, has aplenty of debt headroom to go before the regulatory limit of 50.0% is reached.

On its debt expiry profile, it is also well-staggered out over the years – where just 15% (or $464.0m) of its borrowings will be maturing in the coming FY2022/23 ahead, 9% (or $255.0m) of its borrowings maturing in FY2023/24, 24% (or $725m) of its borrowings maturing in FY2024/25, and the remaining 52% (or $1,570m) of its borrowings maturing only in FY2025/26 and beyond.

Distribution Payout to Unitholders

The management of Mapletree Commercial Trust declares a distribution payout to its unitholders on a half-yearly basis – as such, for the 2nd half of the financial year 2021/22, it have declared a payout of 5.14 cents/unit, a 3.4% drop from the 5.32 cents/unit of distribution payout declared for the same time period last year (i.e. 2H FY2020/21) – this was due to the lack of retained cash released as distribution to unitholders in the first and second half of the previous financial year.

However, if you were to include the the distribution payout of 4.39 cents/unit declared for the first half of the financial year, its full-year distribution payout amounts to 9.53 cents/unit – which is pretty flattish compared to the 9.49 cents/unit declared in the previous financial year.

If you are a unitholder of the REIT, do take note of the following dates regarding its distribution payout:

Ex-Date: 27 April 2022
Record Date: 28 April 2022
Payout Date: 03 June 2022

In Conclusion

The weaker financial performance in the second half of the current financial year under review (compared to the same time period last year) was largely due to the absence of “one-offs” – personally, I am not too concerned. I will continue to monitor its financial performance in the coming quarters ahead and provide updates accordingly.

That said, its portfolio occupancy, as well as its debt profile continues to remain resilient – for the former, it is encouraging to see all of its properties recording improvements in its occupancy rates compared to the previous quarter; for the latter, its healthy aggregate leverage allows the REIT to embark on further yield-accretive acquisitions.

All in all, I’m satisfied with the REIT’s latest set of results. With that, I have come to the end of my review of its latest “report card.” Do take note that everything you’ve just read above is purely for information purposes only, and they do not represent any buy or sell calls for the REIT’s units. As always, you’re strongly encouraged to do your own due diligence before you make any investment decisions.

Related Documents

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

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