Mapletree Commercial Trust’s Latest Earnings: Distributions Up 9.9%

Yesterday, Mapletree Commercial Trust (SGX:N2IU) released its first-quarter earnings report for the financial year ending 30 June 2017 (FY17/18). The reporting period was from 1 April 2017 to 30 June 2017.

Mapletree Commercial Trust is a Singapore-focused real estate investment trust (REIT). At the local front, the REIT has ownership of Singapore’s largest mall, VivoCity. Mapletree Commercial Trust also owns PSA building, Bank of America Merrill Lynch HarbourFront (MLHF), Mapletree Business City I (MBC I) and Mapletree Anson.

You can learn more about the REIT here and here.

Financial Highlights

Here’s a quick view of the latest financial figures for reporting quarter:

1. Gross revenue was $107.8 million, soaring 46.9% compared to the first-quarter a year ago.  

2. Net property income (NPI) rose by 49.6% year on year for the first-quarter. NPI came in at $84.2 million, compared to $56.3 million a year ago. Property operating expenses rose at a slower rate than gross revenue, resulting in higher NPI.  

3. Distribution per unit (DPU) for the reporting quarter was 2.23 cents, up 9.9% year on year. The DPU was 2.03 cents in FY16/17’s first quarter.  

4. Its investment properties were valued at $6.34 billion. The REIT had a net asset value per unit of $1.34.

Foolish investors might want to keep up an eye on the REIT’s debt profile. The debt profile may provide clues on how the REIT is funded and its sensitivity to the interest rate environment. This is summarised below:

Source: Mapletree Commercial Trust’s earnings presentation

Total borrowings increased to $2.33 billion over the past year. A $800 million term loan was added to finance the acquisition of MBC I.

Mapletree Commercial Trust’s gearing increased slightly. The REIT’s weighted average all-in interest also decreased to 2.67% while holding the average weighted debt maturity relatively stable. The percentage of fixed interest rate debt was down slightly to 73.7%. Debt refinancing for FY17/18 has been completed.

Operational Highlights

Mapletree Commercial Trust’s committed portfolio occupancy was 98.1%, a slight improvement from the occupancy of 97.9% recorded in the previous quarter. The REIT also reported a weighted average lease term to expiry (by gross revenue) of about 2.7 years. Meanwhile, shopper traffic at VivoCity increased by 7.2% year on year. Tenant sales rose by 3.8% year on year.

Sharon Lim, chief executive of the manager added some words on the quarter:

“The first quarter of FY17/18 has been fruitful and busy. Arising from persistent weaker demand, the operating environment continued to be challenging for the overall market. In spite of this, MCT’s portfolio has remained largely resilient and stable, driving MCT’s outstanding performance. Led by the accretive acquisition of MBC I and with the positive contributions from VivoCity, Mapletree Anson and PSA Building, 1Q FY17/18 NPI grew by 49.6% year-on-year. Correspondingly, 1Q FY17/18 DPU grew by 9.9% year-on-year.”

Looking forward, Lim said:

“We are also very pleased to announce the addition of a 3,000 square metre public library on Level 3 of VivoCity. As a family-oriented lifestyle mall that caters to all, the library will complement VivoCity’s existing offerings and strengthen its positioning as a destination mall.”

“Asset enhancement works are scheduled to commence in 3Q FY17/18 and complete by 3Q FY18/19. This is an exciting initiative for us and we look forward to contributing meaningfully to the community.”

Foolish summary

Mapletree Commercial Trust last closed at $1.63 on Thursday. The units traded at a price-to-book ratio of 1.22 and have a distribution yield of 5.4%.

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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 Chin Hui Leong does not own shares in any companies mentioned.