The Motley Fool

What Investors Need to Know About Mapletree Commercial Trust’s Latest Earnings

Mapletree Commercial Trust (SGX: N2IU), otherwise known as MCT, released its second quarter results on Friday. In its portfolio, the real estate investment trust has commercial and retail assets such as VivoCity, Bank of America Merrill Lynch HarbourFront, PSA Building, and Mapletree Anson.

Mapletree Investments Pte Ltd is the sponsor of MCT and is also the sponsor of other REITs like Mapletree Logistics Trust (SGX: M44U), Mapletree Industrial Trust (SGX: ME8U) and Mapletree Greater China Commercial Trust (SGX: RW0U).

Let’s take a quick look at how MCT has performed:

1. Financial and Operational Performance

For quarter ended 30 September 2014, MCT’s gross revenue increased 6.3% year-on-year to S$70 million due to positive contributions from VivoCity, PSA Building and Mapletree Anson. Correspondingly, net property income went up by 8.8% to S$52.1 million.

The gross revenue for VivoCity itself was S$3.2 million higher than a year ago due to higher rental income achieved for new and replacement leases and step-ups in existing leases.

With the top-line growth, MCT’s distribution per unit (DPU) rose 9.4% year-on-year to 1.97 Singapore cents. In the corresponding period Last year, the REIT achieved a DPU of 1.80 cents. The latest annualised distribution yield for MCT stands at 5.3% based on its price of S$1.46 last Friday.

On the operational side, the REIT’s overall occupancy rate was at 98.5% as of 30 September 2014. That’s a slight improvement from the occupancy rate of 98.2% seen six months ago on 31 March 2014. For the six months ended 30 September, shopper traffic for VivoCity rose 1.5% to 27.1 million while tenant sales increased 2.5% to S$437.5 million.

2. Capital Management

As of 30 September 2014, MCT’s gearing ratio was reduced to 38.0%, down from 40.8% a year ago. The average maturity of MCT’s loans stands at 3.1 years while its weighted average all-in interest cost is at 2.17% per year.

3. Looking Ahead

Basement 1 of VivoCity will be undergoing a small scale asset enhancement initiative (AEI) to create about 15,000 square feet of extra retail space to take advantage of the strong traffic from the direct connection to Harbourfront MRT station. Some car park space and lower yielding space will be transformed into key retail space as part of the AEI.

The improvement works are expected to start sometime in the fourth quarter of 2014 and is slated to be completed by the end of September next year. MCT expects to spend around S$5.5 million on the AEI with the return on investment estimated to be about 17%.

Currently, MCT is trading at 1.3 times its latest book value per unit of S$1.16.

Click here now for your FREE subscription to Take Stock Singapore, The Motley Fool’s free investing newsletter. Written by David KuoTake Stock Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.

The Motley Fool’s purpose is to help the world invest, better. Like us on Facebook  to keep up-to-date with our latest news and articles.

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