Mapletree Commercial Trust - DBS Research 2020-01-23: Swimming In Familiar Waters


Mapletree Commercial Trust - Swimming In Familiar Waters

  • Mapletree Commercial Trust's 3QFY20 results boosted by steady performance across its portfolio.
  • Majority of renewals completed; looking out for the expiry of PSA Corp’s lease in FY21.
  • Capacity for accretive acquisitions.
  • BUY call and S$2.60 Target Price maintained.

Strong operating results.

  • MAPLETREE COMMERCIAL TRUST (SGX:N2IU) reported a 7.4% rise in 9MFY20 revenues and net property income (NPI) to S$355.5m and S$279.4m respectively. The boost in income came mainly from the contribution of Mapletree Business City Phase 2 (MBC2), which started contributing from 1 Nov 2019 (i.e. 3QFY20). Stripping this impact, YTD NPI would have been c.2.8% higher, driven by higher rents achieved at VivoCity Mall (renewed and new leases), and rental escalations for leases, mainly from its office/business park properties.
  • Revenues/NPI from its office/Business Park properties was up collectively by c.10.5%, mainly due to contribution from MBC2 but organic growth was steady at 1.8% YTD - this was mainly on the back of higher revenues from PSA Building (higher rents received, offset by lower occupancies and compensation received a year back), and MBC 1 (higher rents and step-ups) which had more than offset the dip in revenues from Mapletree Anson due to lower occupancy rates.

Distributable income came in at S$213.1m, up 8.1% y-o-y.

  • This again was mainly attributable to addition of MBC2, and better performance at MBC1 and VivoCity. Mapletree Commercial Trust announced a DPU of 2.32 for 3QFY20 (7.09 Scts for 9MFY20, 3.8% y-o-y increase).

Financial metrics – steady with significant capacity to acquire when opportunity arises.

  • Gearing inched up slightly to 33.4% post the funding of MBC2. However, Mapletree Commercial Trust reported lower all-in cost of debt of 2.96% in 3QFY20 and 75.3% of debt has been swapped to fixed rates.
  • Having refinanced all debt due in FY20, debt maturity profile has been further staggered with not more than 15% of debt due in any one year. For FY21, only 10% of debt will be due for renewal.

Portfolio occupancy rate inches higher; reversions strong at 5.0%.

Rachel TAN DBS Group Research | Derek TAN DBS Research | https://www.dbsvickers.com/ 2020-01-23
SGX Stock Analyst Report BUY MAINTAIN BUY 2.600 SAME 2.600