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Mapletree Commercial Trust’s Latest Earnings: Strong Growth Seen

Mapletree Commercial Trust (SGX: N2IU) is a Singapore-focused real estate investment trust (REIT) that owns office and retail assets. Its portfolio consists of VivoCity, Mapletree Business City I (MBC I), PSA Building, Mapletree Anson and Bank of America Merrill Lynch HarbourFront.

Yesterday, the REIT announced its financial results for the second quarter ended 30 September 2017 (2Q FY17/18). The reporting period was from 1 July 2017 to 30 September 2017.

Here’s a quick rundown on the financial figures from the earnings release:

1. Gross revenue for 2Q FY17/18 grew 21.7% year-on-year to S$107.2 million.

2. Net property income went up 23.4% to S$84.4 million.

3. Income available for distribution rose 20.6% to S$64.7 million.

4. The reporting quarter’s distribution per unit was 2.24 cents, up 9.3% from 2.05 cents a year ago.

5. The net asset value per unit was S$1.37, as of 30 September 2017 – same as the previous quarter.

Gross revenue increased by S$19.1 million for the quarter mainly due to the full quarter contribution from MBC I in 2Q FY17/18 after it was acquired in August 2016 and higher contribution from VivoCity. These were offset by lower contribution from PSA Building and Mapletree Anson.

Revenue for VivoCity grew S$1.7 million higher year-on-year mainly on the back of “higher rental income from new and renewed leases, achieved together with the completed asset enhancement initiatives on Basement 2, Level 1 and Level 3, and the effects of the step-up rents in existing leases”.

For the first half of the financial year, VivoCity’s shopper traffic was stable at 27 million while tenant sales rose 1.1% year-on-year to S$456.5 million.

The committed occupancy of the overall portfolio came in at 98.7%, with a weighted average lease expiry of 2.7 years. Tenant retention rate by net lettable area was 80.8%, but rental rates for new leases dipped 2.2% as compared to the preceding rates.

As at 30 September 2017, the trust had a gearing ratio of 36.4%, which was the same as compared to 30 June 2017. The weighted average all-in cost of debt was 2.7% per annum. There is no refinancing due for the rest of the financial year.

Sharon Lim, chief executive of the REIT’s manager, gave updates on VivoCity:

“Last quarter, we announced plans to add a public library on Level 3 of VivoCity to strengthen its positioning as a destination mall. This asset enhancement initiative (“AEI”) is both exciting and meaningful for us. Initial works, which will start in 3Q FY17/18, include extending Basement 1 by adding over 24,000 square feet of contiguous retail space, and enhancing connectivity with an additional escalator node. We target to complete the AEI in phases by 3Q FY18/19.”

Mapletree Commercial Trust’s units are now going at S$1.585, giving a price-to-book ratio of 1.16 and a trailing distribution yield of 5.7%.

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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 Sudhan P doesn’t own shares in any companies mentioned.