Alongside another Mapletree REIT in Mapletree Industrial Trust (you can read my review of the industrial and data centre REIT’s 4th quarter and full-year results here), Mapletree Pan Asia Commercial Trust (SGX:N2IU), or MPACT for short, have also made available its results for the fourth quarter, as well as for the full year ended 31 March 2023 (i.e. FY2022/23) after market hours yesterday evening (27 April 2023.)
MPACT was formed as a result of a merger between Mapletree Commercial Trust (a pure-play Singapore-focused REIT) and Mapletree North Asia Commercial Trust (where its properties are located in key gateway cities including Hong Kong, China, Japan, and South Korea) in August 2022.
In this post, you’ll find my review of MPACT’s latest set of financial results, portfolio occupancy and debt profile, and also its distribution payout to unitholders.
Let’s begin:
Financial Performance (Q4 FY2021/22 vs. Q4 FY2022/23, and FY2021/22 vs. FY2022/23)
In this section, I will first be reviewing the REIT’s results for the quarter (where I will be looking at its results reported for the 4th quarter of the current financial year under review compared against the same time period last year – i.e. Q4 FY2021/22), followed by its full year results (i.e. FY2021/22 vs. FY2022/23):
Q4 FY2021/22 vs. Q4 FY2022/23:
| Q4 FY2021/22 | Q4 FY2022/23 | % Variance | |
| Gross Revenue (S$’mil) | $125.5m | $233.3m | +85.9% |
| Property Operating Expenses (S$’mil) | $28.1m | $58.9m | > +100.0% |
| Net Property Income (S$’mil) | $97.4m | $177.4m | +82.2% |
My Observations: The huge jump in the REIT’s results for the fourth quarter did not come as a surprise – considering for the current quarter under review, contributions from the properties under Mapletree North Asia Commercial Trust’s portfolio was included as a result of the merger. However, we were to exclude the effects of the merger, then its gross revenue and net property income would have been up by just 9.0% and 8.0% respectively.
The spike in property operating expenses was also due to the expenses incurred by the properties added to Mapletree Pan Asia Commercial Trust’s portfolio following the completion of the merger, along with higher expenses across all of its Singapore properties (which moved in tandem with the increase in activities this year, along with higher utility rates.)
FY2021/22 vs. FY2022/23:
| FY2021/22 | FY2022/23 | % Variance | |
| Gross Revenue (S$’mil) | $499.5m | $826.2m | +65.4% |
| Property Operating Expenses (S$’mil) | $110.8m | $194.2m | +75.3% |
| Net Property Income (S$’mil) | $388.7m | $631.9m | +62.6% |
| Distributable Income to Unitholders (S$’mil) | $317.0m | $449.2m | +41.7% |
My Observations: Similar to my comparison of the REIT’s results for the fourth quarter above, the huge improvement in its full-year results was very much expected – due to effects of the merger (with Mapletree North Asia Commercial Trust) completed in August 2022. However, if we were to exclude the effects of it, the REIT’s gross revenue and net property income would have been up by just 9.2% and 8.5% respectively.
The huge 75.3% jump in the REIT’s property operating expenses was due to expenses incurred by properties from Mapletree North Asia Commercial Trust’s portfolio following the completion of the merger, as well as increase in expenses across all of its Singapore properties (which moved in tandem with the increase of activities this year, and also higher utility rates.)
Portfolio Occupancy Profile (Q3 FY2022/23 vs. Q4 FY2022/23)
Moving on, let us take a look at the portfolio occupancy profile of MPACT – where I will be comparing the figures reported for the current quarter under review (i.e. Q4 FY2022/23 ended 31 March 2023) against that reported in the previous quarter 3 months ago (i.e. Q3 FY2022/23 ended 31 December 2023) to find out if it has continued to remain resilient:
| Q3 FY2022/23 | Q4 FY2022/23 | |
| Portfolio Occupancy (%) | 95.5% | 95.4% |
| Portfolio WALE (years) | 2.6 years | 2.6 years |
My Observations: Compared to the previous quarter 3 months ago, the REIT’s portfolio occupancy profile remains somewhat the same – with the slight 0.1 percentage point (pp) decline in its portfolio occupancy attributed to a 2.1pp dip in committed occupancy in its China properties (down from 88.6% in Q3 FY2022/23 to 86.5% in Q4 FY2022/23), and also a 0.2pp decline in committed occupancy in its Japan properties (down from 97.7% in Q3 FY2022/23 to 97.5% in Q4 FY2022/23.)
Apart from its China properties, where its occupancy level was at 86.5%, the remaining properties all had an occupancy level of above 95.0%, which is very strong in my opinion.
In terms of revenue contribution by tenants, the REIT’s top 10 tenants contributed 22.7% towards its total gross rental income, with no single tenant contributing more than 5.9%.
On rental reversions, it is as follows, with all but Festival Walk and its China properties seeing a positive rental reversion (again, this is good to note):
- Singapore (VivoCity): +7.7%
- Hong Kong (Festival Walk): -12.7%
- Singapore (Mapletree Business City): +8.0%
- Singapore (Other Office & Business Park Properties): +1.6%
- China: -3.7%
- Japan: +1.9%
- South Korea: +14.2%
Finally, on lease expiries in the years ahead, it is very well-staggered, where about 10.0% of its retail leases, and 10.0% of its office/business park leases expiring per year over the next 3 financial years (between FY2023/24 and FY2025/26.)
Debt Profile (Q3 FY2022/23 vs. Q4 FY2022/23)
Similar to how I have reviewed the REIT’s portfolio occupancy profile in the previous section, I will also be looking at its debt profile by taking the statistics reported for the current quarter under review (i.e. Q4 FY2022/23 ended 31 March 2023) against that reported in the previous quarter 3 months ago (i.e. Q3 FY2022/23 ended 31 December 2023) to find out whether its debt profile continues to remain healthy:
| Q3 FY2022/23 | Q4 FY2022/23 | |
| Aggregate Leverage (%) | 40.2% | 40.9% |
| Interest Coverage Ratio (times) | 3.8x | 3.5x |
| Average Term to Debt Maturity (years) | 2.8 years | 3.0 years |
| Average Cost of Debt (%) | 2.57% | 2.68% |
| % of Borrowings Hedged at Fixed Rates (%) | 78.3% | 75.5% |
My Observations: In light of the current rising interest rate environment, no surprises there that the REIT’s debt profile continued to weaken (when compared against the previous quarter 3 months ago.)
However, its aggregate leverage, at 40.9%, still have some buffer before the regulatory limit of 50.0% is reached.
Finally, on its debt maturity profile, its also well-staggered, with 11% (or S$755m) of borrowings due for refinancing in the coming financial year 2023/24, 22% (or S$1,509m) of borrowings due for refinancing in FY2024/25, 21% (or S$1,455m) of borrowings due in FY2025/26, and the remaining 46% (or S$3,222m) of borrowings due for refinancing only in FY2026/27 or later.
Distribution Payout to Unitholders
With effect from the previous quarter, the management of Mapletree Pan Asia Commercial Trust have reverted to paying out a distribution to its unitholders on a quarterly basis – in-line with the other 2 Mapletree REITs (in Mapletree Industrial Trust and Mapletree Logistics Trust) which is paying out distributions to its unitholders in the same time frequency.
For the 4th quarter under review, the management have declared a distribution payout of 2.25 cent/unit.
Together with its distribution payout of 4.94 cents/unit in 1H FY2022/23, and 2.42 cents/unit in Q3 FY2022/23, the REIT’s total payout for FY2022/23 amounts to 9.61 cents/unit – a slight 0.8% improvement compared to its full-year payout of 9.53 cents/unit in FY2021/22 – this was due to a 0.49 cents of cash retained in Q4 FY2019/20 released in FY2021/22. Excluding it, its full year distribution for FY2021/22 will be 9.06 cents, and compared to the full year distribution payout this year, it’s an improvement of 6.1%.
If you are a unitholder of MPACT, do take note of the following dates on its distribution payout:
Ex-Date: 05 May 2023
Record Date: 08 May 2023
Payout Date: 15 June 2023
CEO Ms Sharon Lim’s Comments & Outlook Ahead (from the REIT’s Press Release)
“Our core assets, VivoCity and MBC, continued to deliver improved financial performance, generating a combined S$445.8 million in gross revenue and S$345.9 million of NPI for the year. Together, these two assets accounted for approximately 53% and 54% of the total contribution to revenue and NPI respectively, anchoring MPACT’s overall stability.
Capitalising on Singapore’s robust post-COVID recovery momentum, VivoCity achieved a remarkable milestone with full-year tenant sales surpassing S$1 billion, setting a new record and exceeding pre-pandemic levels. We are also delighted to announce that the ongoing AEI on Level 1 will be ready for a phased opening starting from the end of May 2023. This initiative will inject fresh dynamism by introducing a new retail zone that features a curated selection of popular F&B establishments alongside an enhanced beauty and fragrance cluster. After its strategic footprint optimisation, TANGS will also unveil their rejuvenated store, further enriching the shopping experience at VivoCity. On a stabilised basis, we expect the entire AEI to yield a return on investment of over 20%.
Our Greater China assets, however, continue to navigate the prolonged effects of COVID-19. Notwithstanding, Festival Walk, our retail mall in Hong Kong, maintained close to full committed occupancy by the end of FY22/23, and registered 16.0% and 9.3% year-on-year improvement in shopper traffic and tenant sales respectively. The removal of COVID-19 controls is crucial for eventual recovery, and we will adapt and manage the asset proactively to overcome expected bump.
Looking ahead, the journey to post-pandemic recovery will be uneven, particularly due to the fragile global economy and recent downturns in the tech and finance sectors. Nevertheless, the renewal of several key leases in FY22/23 places us in a comparatively resilient position, and we will deploy targeted strategies to address market changes. We will also prioritise maintaining our balance sheet strength, which underpins MPACT’s overall stability.”
Closing Thoughts
On the whole, the blue-chip retail and office REIT’s latest ‘report card’ was very much within my expectations – in terms of financial performance, the strong double-digit percentage growth in its results for the 4th quarter and for the full year (compared to the corresponding periods the year before) was contributed by the assets from Mapletree North Asia Commercial Trust’s portfolio following the completion of the merger (and a change of name for the REIT from Mapletree Commercial Trust to Mapletree Pan Asia Commercial Trust.) Excluding it, the financial performances would have just be up by a single-digit percentage.
Looking at its portfolio occupancy, in my opinion, they continue to be very strong, with all but its China properties registering a committed occupancy of at least 95%.
For its debt profile, no doubt it has weakened slightly (compared to the quarter before), but aggregate leverage still has an adequate debt headroom before the regulatory limit of 50.0% is reached.
With that, I have come to the end of my review of Mapletree Pan Asia Commercial Trust’s latest set of results. Hope you’ve found the contents presented in this post useful, and as always, they do not represent any buy or sell calls for the REIT’s units. You’re strongly advised to do your own due diligence before you make any investment decisions.
Learn More about Mapletree Pan Asia Commercial Trust in the Upcoming REITs Symposium 2023
Together with the other 2 Mapletree REITs (in Mapletree Industrial Trust and Mapletree Logistics Trust), a booth will be set up, with representatives present for you to learn more, or ask any questions you may have about them, in the upcoming REITs Symposium 2023 on Saturday, 20 May 2023, from 9am to 6pm at Suntec Convention Summit 1 & 2.
This is an event not to be missed if you are someone who is new to REITs and would like to learn more about the individual REITs (a total of 22 Singapore-listed REITs will have booths set up during the event for you to do so), or if you are someone who is currently invested in REITs and would like to learn about industry experts’ views on ‘hot button’ issues including economic outlook for the second half of 2023, whether REITs still make a viable investment in the current high interest rate environment, how you can manage your REITs investment passively and effectively, opportunities and challenges in a post-pandemic era, and more.
Personally, I will be involved in the event as a panelist where, together with industry veterans Gabriel Yap (author of bestselling book ‘Making Your Millions in REITs’) and Willie Keng (founder of investment blog ‘Dividend Titan’), we will be sharing with you our experiences in REITs investing (the panel event will be held from 5.00pm to 5.45pm.)
You can find out more about the event, as well as secure your seat, here – if you are among one of the first to apply the promo code RS23JY, you can get a 50% discount off the original price – if the discounted price is not reflected, it means that the promo code has been fully redeemed.
I look forward to meeting up with you in-person at on 20th May!
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Disclaimer: At the time of writing, I am a unitholder of Mapletree Pan Asia Commercial Trust.
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