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Mapletree Greater China Commercial Trust Beats Forecasts

Mapletree Greater China Commercial Trust (SGX: RW0U), the newest trust from Mapletree Investments, announced its fourth quarter earnings yesterday. Mapletree Investments, which is linked to Temasek Holdings (one of the Singapore government’s wealth management arms), has other trusts under its banner that include Mapletree Logistics Trust (SGX: M44U)Mapletree Industrial Trust  (SGX: ME8U) and Mapletree Commercial Trust  (SGX: N2IU).

Mapletree Greater China Commercial Trust, or MGCCT,  currently owns one property each in Beijing and Hong Kong. The trust’s property in Hong Kong, named Festival Walk, is a mixture of retail and office space while Gateway Plaza, its property in Beijing, is mainly a premier office building with a smattering of retail activity.

How did the trust fare?

This is the first financial year in which MGCCT is announcing its full year results given it just got listed in March last year.

Overall, for the period stretching from 7 March 2013 to 31 March 2014, its report card came in far better than what was forecasted in its IPO prospectus. The trust had been able to record annual revenue of S$267.6 million, which was 7.4% more than its forecast. Its income available for distribution to unitholders, coming in at S$168 million, also beat its forecast handily by 13.3%. On a per-unit basis, its full-year distribution comes up to 6.265 Singapore cents; that translates to a trailing distribution yield of 7.2% for investors based on the trust’s latest unit price of S$0.87.

Due to revaluation of its properties, MGCCT also ended its financial year with a net asset value that’s higher than the pro-forma numbers (figures that were presented as if the trust had been in existence since a particular date) it had presented as of 30 Sep 2012. As of 31 March 2014, the trust recorded a net asset value per unit of S$ 1.058, some 15.9% higher than what it was as of 30 Sep 2012. Its gearing ratio has also improved since its listing date, dropping from 43% to 38%.

For some operational highlights, the REIT’s properties continue to enjoy a strong occupancy rate at 98.5% on average. Furthermore, there was a huge 20% and 22% rental uplift (i.e. rent increases based on the renewal or re-let of expiring leases) in the retail and office space for Festival Walk. That’s not all though as Gateway Plaza had experienced a phenomenal 79% rental uplift.

The trust ended the financial year with tenants that come from more than 14 different trade sectors that include Apparel & Fashion Accessories, Food & Beverages, Professional & Business Services, and more. With a rather diversified tenant mix, it can be beneficial for the trust as it is not dependent on any one particular sector for its business.

Foolish Summary

The manager of the REIT expects the Hong Kong retail market to provide strong support for its retail mall activities. Meanwhile, there is a trend in the Hong Kong office market where companies are looking to relocate in search of cheaper alternatives. On the China front, MGCCT expects the country to “stay on a more measured and sustainable growth, driven by government reforms.”

All told, the trust’s management is optimistic on the prospects of its two properties going forward.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.