Previously known as Mapletree Commercial Trust, where it owns commercial properties in Singapore, it was renamed as Mapletree Pan Asia Commercial Trust (SGX:N2IU) upon the completion of a merger with Mapletree North Asia Commercial Trust (where it owns commercial properties in Hong Kong, China, Japan, and South Korea) in August 2022. Currently, it has 5 properties in Singapore, 1 in Hong Kong, 2 in China, 9 in Japan, and 1 in South Korea.
In-line with the other 2 Mapletree REITs (in Mapletree Industrial Trust and Mapletree Logistics Trust), it has reverted to paying out a distribution once every quarter (from once every half-yearly.) Also, the REIT have reverted to making available its full financial results every quarter.
Last Friday, the REIT have just conducted its annual general meeting (AGM) for the financial year ended 31 March 2023 (i.e., FY2022/23), and you can read about a summary I have compiled here.
Yesterday evening (31 July 2023), the REIT have released its results for the 1st quarter ended 30 June 2023 (i.e., Q1 FY2023/24), and you can find my review of its latest financial results, portfolio occupancy and debt profile, as well as its distribution payout to unitholders in this post:
Financial Results (Q1 FY2022/23 vs. Q1 FY2023/24)
The following table is Mapletree Pan Asia Commercial Trust’s results for Q1 FY2023/24, compared with that reported in the same time period last year (i.e., Q1 FY2022/23):
| Q1 FY2022/23 | Q1 FY2023/24 | % Variance | |
| Gross Revenue (S$’mil) | $135.0m | $237.1m | +75.6% |
| Property Operating Expenses (S$’mil) | $28.3m | $57.9m | > +100.0% |
| Net Property Income (S$’mil) | $106.7m | $179.2m | +68.0% |
| Distributable Income to Unitholders (S$’mil) | $83.3m | $114.8m | +37.8% |
My Observations: No surprises that the REIT’s financial result for Q1 FY2023/24 have surged, which can be attributed to revenue contribution from properties in Mapletree North Asia Commercial Trust following the completion of the merger back in August 2022, offset by the translation effects of a stronger Singapore Dollar for contributions coming from its overseas properties.
Excluding the effects of the merger, however, gross revenue would have been up by just 4.1% (due to positive contributions across all major revenue categories including fixed rent, car park income, and advertising and promotion income, were observed for the Singapore properties, partially offset by lower compensation sum received from the pre-termination of leases in Q1 FY2023/24 compared to Q1 FY2022/23), and net property income would have been up by just a mere 0.3% (as the higher gross revenue from the Singapore properties were offset by higher utilities expenses).
Portfolio Occupancy (Q4 FY2022/23 vs. Q1 FY2023/24)
Moving on, let us take a look at the REIT’s portfolio occupancy profile below, where I will be comparing the figures reported for the current quarter under review (i.e., Q1 FY2023/24 ended 30 June 2023) against that reported in the previous quarter 3 months ago (i.e., Q4 FY2022/23 ended 31 March 2023), as follows:
| Q4 FY2022/23 | Q1 FY2023/24 | |
| Portfolio Occupancy (%) | 95.4% | 95.7% |
| Portfolio WALE (years) | 2.6 years | 2.6 years |
My Observations: Portfolio occupancy continues to remain very strong at 95.7%, with all of its properties recording an occupancy rate of above 90% except the China properties (at 87.3%, but still an improvement from 86.5% recorded in Q4 FY2022/23).
Positive rental reversions were also recorded for all of its markets except Greater China (where Festival Walk, and the 2 China properties recorded a negative rental reversion of -9.4%, and -3.6% respectively).
Lease expiries were well-staggered, with approximately 8.2% of the retail leases and 7.5% of the office/business park leases expiring in the remaining 3 quarters of the current financial year 2023/24, 13.8% of the retail leases and 10.4% of the office/business park leases expiring in FY2024/25, 9.2% of the retail leases and 13.0% of the office/business park leases expiring in FY2025/26, and the remaining 12.7% of the retail leases and 25.1% of the office/business park leases expiring only in FY2026/27 or later.
Debt Profile (Q4 FY2022/23 vs. Q1 FY2023/24)
Apart from studying a REIT’s financial performance and portfolio occupancy whenever they release its quarterly results, another area I focus on is its debt profile, to make sure it continue to remain at a healthy level – this is all the more important in the current high interest rate environment we are in.
In the table below, you will find a comparison of Mapletree Pan Asia Commercial Trust’s debt profile for the current quarter under review (i.e. Q1 FY2023/24 ended 30 June 2023) against that recorded in the previous quarter 3 months ago (i.e. Q4 FY2023/24 ended 31 March 2023):
| Q4 FY2022/23 | Q1 FY2023/24 | |
| Aggregate Leverage (%) | 40.9% | 40.7% |
| Interest Coverage Ratio (times) | 3.5x | 3.2x |
| Average Term to Debt Maturity (years) | 3.0 years | 2.9 years |
| Average Cost of Debt (%) | 2.68% | 3.2% |
| % of Borrowings Hedged to Fixed Rates (%) | 75.5% | 74.2% |
My Observations: With the high interest rate environment, no surprises there that MPACT’s debt profile have weakened.
In terms of debt maturity, it is well-spread out over the next couple of years – with just 6% (or S$429m) of borrowings due for refinancing in the remaining 3 quarters of FY2023/24, 22% (or S$1,495m) of borrowings due for refinancing in FY2024/25, 22% (or S$1,503m) of borrowings due for refinancing in FY2025/26, and the remaining 60% (or S$3,430m) of borrowings due for refinancing in FY2026/27 and beyond.
That said, with about 50% of its borrowings due for refinancing from now till 31 March 2026, where interest rates is likely to remain high, its distribution payout to unitholders could be further impacted.
Distribution Payout to Unitholders
For Q1 FY2023/24, a distribution payout of 2.18 cents was declared. Compared against the distribution payout of 2.5 cents/unit in the same time period last year, this represented a 12.8% decline. This was due to an enlarged unit base as a result of the merger.
If you are a unitholder of the REIT, do take note of the following dates on its distribution payout:
Ex-Date: 07 August 2023
Record Date: 08 August 2023
Payout Date: 14 September 2023
CEO Sharon Lim’s Comments & Outlook (from the REIT’s Press Release)
“MPACT’s portfolio demonstrated resilience in 1Q FY23/24, with stronger performance by the Singapore properties and largely steady earnings from the overseas properties. The portfolio also achieved stable NPI as compared to the preceding quarter. This set of results reflect the underlying operational strength of our assets. Nonetheless, we must acknowledge that our financial performance was impacted by broader market dynamics, including increased utility costs and higher interest rates. Because of the stronger Singapore dollar (“SGD”), contributions from the overseas properties were also impacted by foreign exchange effects when translated into SGD.
Despite prevailing economic softness across markets, we are proud of our team’s leasing efforts. They achieved continued success in backfilling mTower and secured lease renewal with a key tenant at Sandhill Plaza. Notably, rental uplifts were locked in by all markets except Greater China, resulting in a favourable 2.4% rental reversion for the portfolio. These accomplishments mitigated occupancy risks and will reinforce the resilience of MPACT.
After achieving record tenant sales in FY22/23, VivoCity continued its robust growth, with 1Q FY23/24 tenant sales exceeding pre-COVID levels by over 20%. The completion of our latest asset enhancement initiative (“AEI”) is set to further bolster VivoCity’s growth trajectory. We are also cautiously optimistic about Festival Walk, our other retail asset in Hong Kong, as it emerges from the effects of social incidents and COVID-19 pandemic. 1Q FY23/24 shopper traffic and tenant sales rose 18.2% and 12.1% year-on-year, and the property continued to show signs of rental stabilisation.
As we progress into 2023, our resilience stems from the strength of our core assets, and the high occupancies resulting from key lease renewals within the portfolio. We will maintain our agility and proactive approach in driving our assets while effectively adapting to market changes. Preserving the stability of our balance sheet remains a top priority for us.”
Closing Thoughts
MPACT’s latest set of financial results were within my expectations, with the huge jump in its gross revenue and net property income as a result of properties included into the REIT’s portfolio following the completion of the merger with Mapletree North Asia Commercial Trust in July 2022.
In terms of its portfolio occupancy, I must say it is very resilient, where the occupancy rates of its properties are above 90%, with the exception of the 2 China office properties, which were at 80+% (but still a healthy one regardless).
On its debt profile, it’s also considered healthy. The only thing is that, with about 50% of its borrowings due for refinancing from now till 31 March 2026, coupled with interest rates likely to remain at elevated levels (my guesstimate is it will come down to around the 4% level by end-2024, and then down to around the 3% level by end-2025 and staying there), higher borrowing costs may further impact its distribution per unit in the coming quarters.
Finally, the slight dip in its distribution payout to unitholders as a result of a high unit base (following the completion of the merger) was also within my expectation.
With that, I have come to the end of my review of Mapletree Pan Asia Commercial Trust’s results for the 1st quarter of FY2023/24 ended 30 June. As always, I hope you have found the contents presented in this post useful, and do note that all the opinions you have just read above are purely mine which I am sharing for educational purposes only. You are 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 Pan Asia Commercial Trust.
Launch Event for My First Book: building your REIT-irement portfolio
After months of hard work, my first book, 'Building Your REIT-irement portfolio' is finally ready! In this easy-to-follow 178-page guide, you'll learn everything you need to know about building a REIT portfolio that can provide for you in your retirement years. You can check out a preview of the book here.
I'm extremely thankful to the team at InvestingNote and ShareInvestor for their help to organise a book launch event for me on Tuesday, 26th September 2023, from 6:00pm to 8:00pm at their office in New Tech Park.
For more details and to RSVP (seats are extremely limited), click on the link below:
Click here for more details on the book launch event and RSVP here...
Comments (0)