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Singapore’s Next Blue Chip Idol: Mapletree Commercial Trust

Mapletree Commercial Trust (SGX: N2IU) is one of the five reserve companies for the Straits Times Index (SGX: ^STI). In other words, should any of the 30 blue chip companies drop out from the index, Mapletree Commercial Trust would be one of the candidates to replace them.

Let’s find out more about the real estate investment trust (REIT).

A Closer Look

Mapletree Commercial Trust is the owner of five buildings located in Singapore namely, VivoCity, Mapletree Business City 1, PSA building, Mapletree Anson and Bank of America Merrill Lynch Harbourfront. The five properties have a total net lettable area of 3.9 million square feet, and is valued at S$6.7 billion.

Next, let’s have a look at its financials to see how it has been doing. First up, we have the REIT’s distributable income and distribution per unit.

Source: Mapletree Commercial Trust Annual report FY17/18

The chart above shows that Mapletree Commercial Trust has grown its distributable income and distribution per unit (DPU) by 14% per year and 5.2% per year respectively, over the last five years. The difference in growth rates can be attributed to the increase in total number of units outstanding.

Next, let’s look at the REIT’s debt profile.

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Source: Mapletree Commercial Trust FY17/18 Presentation

We can see from the graph above that Mapletree Commercial has a well-spread out debt profile with only 6% of its debt due in its current fiscal year.

On another note, the REIT has an aggregate leverage of 34.5% which is comfortably below the 45% regulatory limit. The average term to maturity for its debt was 3.9 years with an average cost of debt of 2.75%. Meanwhile, almost 79% of the REIT’s borrowings are on fixed rate loans. Overall, the REIT’s debt looks manageable.

To close, let’s have a look at the REIT’s net asset value (NAV). The table below shows that the REIT has been able to grow its NAV steadily over the past five years. Mapletree Commercial Trust’s NAV increased from S$1.16 in the financial year ended 31 March 2015 (FY14/15) to S$1.49 in FY17/18 representing a 6.5% increase per annum.


Source:  Mapletree Commercial Trust Annual report FY17/18

To sum it all up, Mapletree Commercial Trust has been posting growth in its distribution per unit and NAV consistently over the past five years. Together with its manageable debt profile and well-located properties, it looks like a fine blue chip candidate for the STI. At current prices, the REIT has a market capitalisation of S$4.7 billion and offers a distribution yield of 5.5%.

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The Motley Fool Singapore contributor Esjay contributed to this article. Esjay owns shares in Mapletree Commercial Trust.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore has recommended shares of Mapletree Commercial Trust. Motley Fool Singapore writer Chin Hui Leong does not own any of the shares mentioned.