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Mapletree North Asia Commercial Trust’s Latest Earnings: Gross Revenue Up By 19.4%

Last Friday, Mapletree North Asia Commercial Trust (SGX: RW0U), or MNACT, released its 2018/19 third-quarter earnings update. MNACT is a Singapore-based commercial REIT with nine properties in China, Hong Kong, and Japan.

Here are nine things investors should know about MNACT’s latest results:

  1. Gross revenue for the reporting quarter grew 19.4% year over year to S$105.6 million, while net property income improved by 18.5% year over year to S$84.6 million.
  2. Consequently, the REIT’s distribution per unit (DPU) was up by 3.2% year over year to 1.927 cents.
  3. Based on MNACT’s annualized DPU of 7.645 cents (calculated using year-to-date DPU of 5.734 cents) and its closing unit price of S$1.23 (as of writing), the REIT has a trailing distribution yield of 6.1%.
  4. As of 31 December 2018, the REIT’s gearing stood at 39%, which is close to the regulatory ceiling of 45%.
  5. The REIT’s portfolio had an occupancy rate of 99.7% at the end of the quarter.
  6. The weighted average lease expiry (by gross rental income) was at 2.9 years as of 31 December 2018.
  7. The average rental reversions for the properties as of 31 December 2018 are as follows: Festival Walk (+32% for Retail and +15% for Office), Gateway Plaza (+8%), Sandhill Plaza (+14%), and Japan properties (+6%).
  8. Year to date, Festival Walk, Gateway Plaza, Sandhill Plaza, and Japan properties accounted for 62%, 22%, 6%, and 10%, respectively, of MNACT’s gross revenue.
  9. Here are the comments from the REIT on its outlook:

“The International Monetary Fund expects world economic growth to moderate to 3.5% in 2019 from 3.7% growth achieved in 2018, mainly due to the impact of trade tariffs and prolonged trade tensions, as well as higher interest rates.

In Hong Kong, market uncertainties together with the volatile stock and softer residential property markets have resulted in a moderation in retail sales momentum. Should this persist, it may continue to dampen retail sales performance in Hong Kong. Festival Walk is however expected to maintain a stable performance, as it is a popular retail and lifestyle destination and is well supported by local shoppers.

For Beijing, in view of the uncertain economic environment, tenants are taking a more cautious approach towards lease renewal and expansion, putting downward pressure on the city-wide occupancy rate. While Gateway Plaza has been maintaining high occupancy rates, the weaker office market may pose challenges to the occupancy levels going forward.

Business park supply in Shanghai is expected to increase. However, the expanding metro connectivity is expected to improve accessibility and continue to stimulate demand for business park space. Sandhill Plaza’s performance is expected to remain resilient.

The Japan Properties are expected to provide stable income streams, underpinned by high average occupancy rates and long average lease expiry period.”

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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 Lawrence Nga doesn’t own shares in any companies mentioned.