Mapletree Pan Asia Commercial Trust (SGX:N2IU) is a retail and office REIT that invests in properties in key gateway cities in Asia – namely Singapore, Hong Kong, China, Japan, and South Korea.

The REIT was first listed on the Singapore Exchange in April 2011 as Mapletree Commercial Trust, where its portfolio comprises of retail and office properties in Singapore. Following its merger with Mapletree North Asia Commercial Trust (where its portfolio comprises of retail and office properties in Hong Kong, China, Japan, and South Korea) in July 2022, it was renamed to Mapletree Pan Asia Commercial Trust, or MPACT for short.

Following the conclusion of the financial year on 31 March 2023 (i.e., FY2022/23), the REIT have made available its annual report this morning (06 July 2023) – which you will find key pointers to take note of, together with details of its upcoming annual general meeting (AGM).

Let’s begin:

Summary of MPACT’s Annual Report

Successful Merger with Mapletree North Asia Commercial Trust:

  • Due to increasingly limited opportunities within Singapore, it became clear the REIT needed to look beyond its home country to secure future growth.
  • To achieve this, the merger with Mapletree North Asia Commercial Trust, which provides a ready platform with extensive scale and reach in Asia, a region with a shared background and familiarity, was proposed and subsequently approved by unitholders of both REITs in separate Extraordinary General Meetings in May 2022.
  • The merger was completed on 21 July 2022, and the REIT renamed on 03 August 2022.

Financial Performance:

  • Gross revenue and net property income gained 65.4% and 62.6% to S$826.2m (FY2021/22: S$499.5m) and S$631.9m (FY2021/22: S$388.7m) respectively, primarily driven by the contribution from properties acquired through the merger, as well as higher earnings from its core assets (namely VivoCity and Mapletree Business City.) However, this was offset by an increase in utility and financing expenses. Excluding the effect of the merger, gross revenue and net property income were up by 9.2% and 8.5% respectively.
  • Amount available for distribution to unitholders jumped 41.7% to S$445.6m (FY2021/22: S$317.0m), with Distribution Per Unit (DPU) at 9.61 Singapore cents (FY2021/22: 9.53 Singapore cents), up 0.8% – Excluding the release of retained cash in FY2021/22, its DPU have grown by 6.1%.

Portfolio Performance:

  • VivoCity and Mapletree Business City continued to provide a steady income stream for the REIT, where they accounted for approximately 53% and 54% of the total contribution to revenue and net property income respectively.
  • Updates on Individual Properties:
    • VivoCity: Full-year tenant sales surpassed S$1 billion, setting a record high and exceeding pre-pandemic levels; Committed occupancy was at 99.1%, and an impressive rental uplift of 7.7%.
    • Mapletree Business City: Despite changes in workspace requirements by some businesses adapting to new normal of hybrid work arrangements, committed occupancy remained resilient at 95.4%, along with a full-year rental uplift of 8.0%.
    • mTower, Mapletree Anson, and Bank of America Merrill Lynch Harbourfront: Collectively, they posted a committed occupancy of 95.9%, and recorded a full-year rental uplift of 1.6%.
    • Festival Walk: Gradual relaxation of Covid-19 restrictions, and reopening of border with China saw shopper traffic and tenant sales improved by 16.0% and 9.3% compared to last year; Property achieved a committed occupancy of 99.6%. Coupled with signs of rent stabilisation, outlook looks more promising.
    • Gateway Plaza, and Sandhill Plaza: Tight social distancing measures and lengthy lockdowns during the financial year hindered leasing efforts and weighed on their performance, leading to a committed occupancy of 86.5%; The lifting of Covid-19 measures and border reopening in China since early 2023 presented opportunities to improve the performance of these 2 properties.
    • Japan Properties: Committed occupancy of 97.5%, and full-year positive rental reversion of 1.9%.
    • The Pinnacle Gangnam: Committed occupancy of 99.3%, and a strong rental reversion of 14.2%; Vibrant Gangnam Business District market, characterised by limited supply, is expected to continue to support occupancy and rental rates.
  • Contribution by the top 10 tenants by gross rental income is 22.7%, with no single tenant contributing more than 5.9%.

Capital Management:

  • Aggregate leverage was at 40.9%, with weighted average all-in cost of debt at 2.68% per annum, and adjusted interest coverage ratio approximately 3.5x on a 12-month trailing basis. Debt headroom was approximately S$3.1 billion (to 50.0% aggregate leverage limit).
  • Debt maturity profile is well-staggered, with no more than 22% of debt due in any financial year.
  • About 75.5% of its total gross debt of S$6.9 billion (comprising of S$5.9 billion in bank borrowings and S$1.0 billion of bonds and notes) was fixed through fixed rate debt or interest rate swaps, with 93% of its expected distributable income (based on rolling 4 quarters) derived from or hedged into Singapore dollar. This will help mitigate the effects of volatilities in interest and foreign exchange rates.
  • At the end of FY2022/23, the REIT have in total of approximately S$1.6 billion of cash and undrawn committed facilities, ensuring sufficient liquidity to fulfil its working capital and financial obligations. Notably, there is no refinancing risk in FY2023/24.
  • Based on unhedged debt as at 31 March 2023, if benchmark rates were to increase/decrease by 50 basis points, with all other variables held constant, DPU on a full-year basis would be approximately 0.16 Singapore cents lower/higher.

Sustainability Efforts:

  • Some of the key sustainability achievements include: Approximately 85% of its portfolio (by lettable area) being green-certified; generation of more than 1.9m kilowatt-hour (kWh) of solar energy; introduction of green leases in Singapore; update of MPACT’s Green Finance Framework and subsequent issuance of green notes under this framework.
  • This is in addition to the adoption of a new climate risk assessment tool to help them better assess climate-related risk and further conducted scenario analysis in-line with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), enabling them to address climate mitigation, adaptation, and resilience effectively.
  • MPACT will also be participating in the 2023 GRESB Real Estate Assessment, expanding on the participation of MCT and MNACT in previous years. It has also updated its reporting framework to align with SGX-ST’s new core metrics and the Global Reporting Initiative Standards 2021.

Looking Ahead:

  • In the face of recent downturns in the tech and finance sectors, the REIT’s management took comfort in the renewal of several key leases at Mapletree Business City (renewal of majority of Google’s leases over the last 2 financial years), Bank of America Merrill Lynch Harbourfront (lease renewed successfully in FY2022/23), Festival Walk (renewal of lease with Arup, a major office tenant at the property), and Gateway Plaza (renewal of lease of its 2nd largest tenant in BMW for 5 years until 2028), which placed them in a resilient position.
  • Moving forward, the REIT’s management will continue to deploy targeted strategies to manage its assets and advance its objectives, and executing its ‘4R’ Asset & Capital Management Strategy in Recharge, Refocus, Reconstitute, and Resilience.

Details of MPACT’s 12th Annual General Meeting

MPACT will be holding its 12th AGM on Friday, 28 July 2023, at 2.30pm.

Unitholders have the option of attending the meeting in-person, as well as virtually (you can also cast your votes ‘live’ – cheers to the REIT for making this option available) – whichever option you choose, you need to pre-register here: (do note that the deadline to do so will be on Tuesday, 25 July 2023, at 2.30pm).

I have already pre-registered to attend the meeting virtually, and for the benefit of those who are not able to attend, you can check out my summary of it which I will publish in due course.

Related Documents

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

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