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Mapletree Commercial Trust Delivers 1.3% Higher DPU In Its Latest Earnings

Mapletree Commercial Trust (SGX: N2IU) posted an increase in distribution per unit (DPU) on Wednesday, benefitting from higher contributions from its asset base.

Mapletree Commercial Trust is a real estate investment trust (REIT) that owns the iconic VivoCity, and four other commercial-based properties in its portfolio. The latest report was for the REIT’s second-quarter earnings results for fiscal year ending on 31 March 2019 (FY18/19). The five properties have a total net leasable area (NLA) of 3.9 million and was valued at S$6.68 billion.

Let’s take a quick look at the results from its latest quarter:

  1. Gross revenue rose by 2.5% year-on-year to S$109.9 million while net property income saw a similar increase of 2.2% to S$86.3 million. The increase in revenue and net property income was on the back of higher contributions from Vivocity, Mapletree Business City, and Bank of America Merill Lynch HarbourFront.
  2. Distributable income also grew by 1.3% to S$ 65.6 million compared to the same period in a year ago. Distribution per unit (DPU) showed a similar increase, coming in at 2.27 cents.
  3. Next, we take a look at the REIT’s debt profile. As of 30 September 2018, Mapletree Commercial’s gearing stood at 34.8%. The weighted average annualized interest rate was reported to be 2.93% with 75% of the debt on fixed-rate loans. Average debt duration for the REIT was 4.1 years and there were no debt refinancing obligations were left for the fiscal year.
  4. Let’s us now have a look at Mapletree Commercial Trust’s operational statistics. The REIT’s portfolio had an occupancy rate of 95.9% at the end of the quarter, which is a decline from 96.4% occupancy reported at the end of June. On the rental reversion front, the property owner reported a 1.8% increase across its portfolio. Looking deeper, Mapletree Commercial’s retail asset, VivoCity saw a 3.1% increase in shopper traffic in the first half of FY18/19.
  5. The weighted average lease expiry (by gross rental income) for the portfolio stood at 2.8 years at the end of the reporting quarter with only 4.4% of the leases expiring in FY18/19.
  6. Lastly, the REIT’s net asset value (NAV) remained stable at S$1.49 compared to 31 March 2018.

The Road Ahead

Mapletree Commercial’s CEO, Ms Sharon Lim, provided some portfolio updates,

“We are delighted that FairPrice, one of Singapore’s most established grocers, will enter VivoCity with a new integrated concept by 1H FY19/20. Specifically designed to cater to the varied needs of our shoppers, the new concept is expected to further enhance VivoCity’s retail offerings. On top of that, we can look forward to financial upside from the positive rental uplift of the new lease, as well as the conversion of some recovered space into higher yielding specialty shops. We are also eagerly anticipating the launch of the public library on Level 3 by 2H FY18/19. Overall, the library fits well into VivoCity’s positioning that focuses on families with children. We are confident that the addition will encourage repeated visitorship and strengthen VivoCity’s attractiveness as a destination mall.”

Units of Mapletree Commercial Trust closed at S$1.61 yesterday, sporting a price-to-book ratio of around 1.08 and a yield of 4.66%.

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The Motley Fool Singapore contributor Esjay contributed to this article. Esjay owns units of Mapletree Commercial Trust.

The information provided is for general information purposes only and is not intended to be personalized 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.