Mapletree Commercial Trust - Maybank Kim Eng 2019-10-16: Acquisition Priced In

MAPLETREE COMMERCIAL TRUST (SGX:N2IU) | SGinvestors.io MAPLETREE COMMERCIAL TRUST (SGX:N2IU)

Mapletree Commercial Trust - Acquisition Priced In


Results in line, factoring in MBC II deal; Prefer FCT




Mixed bag – retail performed better

  • Mapletree Commercial Trust's 2Q20 revenue and NPI increased by 1.9% y-o-y and 1.7% y-o-y, with better contributions across all properties, except Mapletree Anson (revenue and NPI down 17.8% y-o-y and 21.7% y-o-y). See Mapletree Commercial Trust's announcements.
  • Mapletree Commercial Trust’s portfolio occupancy was down q-o-q from 97.3% to 96.1% with weaker transitory occupancy at Mapletree Anson (from 92.7% to 75.1%), but committed occupancies for all assets stayed high at 93.1%-100.0%.
  • Rental reversion was at +6.8% for its retail segment (VivoCity) versus +7.3% in 1Q20, and at +0.7% for its office/ business park segment, up from +0.3% earlier.
  • Management attributed 2.7% of its leases (by gross rental income) to WeWork, with the latter’s tenancies at PSA Building and Mapletree Anson.


VivoCity growth momentum to pick up

  • VivoCity’s revenue and NPI increased 5.1% y-o-y and 4.9% y-o-y, even as shopper traffic and tenant sales fell 2.8% y-o-y and 2.0% y-o-y. We expect stronger sales growth momentum in the coming quarters, led by:
    1. a higher contribution from grocer NTUC Fairprice (91k sf across level 1 and basement since Aug 2019);
    2. new F&B tenancies (24k sf); and
    3. the expanded Uniqlo space (since Sep 2019).
  • Management shared that F&B tenancies delivered +10% in rental reversions, and is guiding for positive reversions for the mall for FY20-21, in line with our expectations.


Stronger AUM profile, higher tenancy risk

  • Post the MBC II deal, Mapletree Commercial Trust’s three best-in-class assets - VivoCity, MBC I & II - contribute 80% of its AUM and NPI, but tenant concentration risks have also risen with Google occupying 13.5% of its enlarged NLA.
  • We see its low 31.7% gearing and SGD1.7b in debt headroom supporting further opportunities from its 1.8m sf NLA sponsor pipeline, but potential deals are likely towards the medium-to-longer term.





Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2019-10-16
SGX Stock Analyst Report HOLD MAINTAIN HOLD 2.35 UP 2.100



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