Mapletree Commercial Trust 2HFY21 - UOB Kay Hian 2021-04-29: Weathered The Storm, Riding The Recovery


Mapletree Commercial Trust 2HFY21 - Weathered The Storm, Riding The Recovery

  • Mapletree Commercial Trust reported DPU of 5.32 cents (+57.9% y-o-y) for 2HFY21, which is slightly above our expectation.
  • VivoCity maintained stable occupancy of 97.1%. Tenant sales reversed to expansion of 5.2% y-o-y in 4QFY21. Occupancy at MBC II temporarily dropped 5ppt q-o-q to 90.2% in 4QFY21 but the new tenant will start contributing in 1QFY22.
  • Mapletree Commercial Trust’s properties are strategically located to benefit from the Sentosa-Brani Master Plan and Greater Southern Waterfront (GSW). Maintain BUY. Target price: S$2.50.

Mapletree Commercial Trust's 2HFY21 Results

  • Mapletree Commercial Trust (SGX:N2IU) reported DPU of 5.32 cents (+57.9% y-o-y) for 2HFY21, which is slightly above our expectations. Distributable income increased 61.5% y-o-y. If we exclude the release of retained cash of S$13.0m in 2HFY21 and capital distribution retained of S$43.7m in 4QFY20, growth in distributable income would be 6.5% y-o-y. The results were slightly above our expectations.

VivoCity: Progressive recovery in tandem with re-opening.

  • Gross revenue and NPI from VivoCity grew 2.9% and 3.7% y-o-y respectively. VivoCity maintained stable occupancy of 97.1%. VivoCity suffered negative rental reversion of 9.6% but retention rate remains healthy at 80.8% in FY21. Rental rebates have tapered off from 3.5 months (S$56m) in 1HFY21 to 0.4 months (S$6m) in 2HFY21.
  • Tenant sales have reversed from contraction of 14.1% y-o-y in 3QFY21 to expansion of 5.2% y-o-y in 4QFY21. Adidas has opened a second flagship store covering 13,000sf at VivoCity to showcase its Performance line of sportswear. New F&B concepts introduced include Tamago-EN and Riverside Grilled Fish.

Office/business park: Full-period contribution from MBC II.

  • Gross revenue and NPI from office/business park were flat y-o-y. Lower contributions from MBC I and mTower were offset by full-period contribution from MBC II.
  • Occupancy at MBC II has temporarily dropped 5ppt q-o-q to 90.2% in 4QFY21. The new tenant has commenced fitting out and will start contributing in 1QFY22.
  • Conversely, occupancy at mTower improved 4.4ppt q-o-q to 75.5% due to partial backfilling of vacant space. The replacement tenant for space vacated by PSA Corporation has pre-terminated before the new lease commences and has agreed to pay compensation amounting to 16 months of rent, which could result in an estimated one-off income of S$7m.
  • Occupancy for Mapletree Anson and Bank of America Merrill Lynch HarbourFront (MLHF) remained at 100%.
  • Mapletree Commercial Trust's office/business park portfolio registered mild positive rental reversion of 0.4%. NPI margin improved by 0.6ppt h-o-h to 79% in 2HFY21 due to Job Support Scheme credits and savings in utilities and advertising & promotions.

NAV per unit increased 0.6% h-o-h to S$1.72.

  • Mapletree Commercial Trust has recognised a small fair value gain from revaluation of its investment properties of S$11.5m, derived mainly from MBC I. Cap rates for business park properties have compressed based on recent transactions, such as Keppel Bay Tower at Habourfront and Sandcrawler at One-North.

Maintains resilient balance sheet.

  • Aggregate leverage is low at 33.9%. The average all-in cost of debt improved 0.03ppt q-o-q to 2.48%. Mapletree Commercial Trust has cash and undrawn committed facilities of more than S$600m, which provides financial flexibility. Its debt maturity is well spread out with no more than 24% of debt due in any financial year. It has redeemed MTN of S$70m and has completed all refinancing for FY22.


Turned the corner and progressively recovering.

  • With effect from 5 Apr 21, safe management measures have been eased to allow up to 75% of employees to work from their offices. VivoCity will benefit from increased shopper traffic as more employees return to work at offices in the vicinity. The office and business park markets have stabilised and leasing enquiries have picked up. The easing of safe management measures and limited supply will support lease renewal.

Strategic location benefitting from government’s long-term plans.

  • Mapletree Commercial Trust has five properties located in the Harbourfront area, which accounted for 91.4% of its portfolio valuation in aggregate. Thus, it will benefit immensely from the development of the GSW and rejuvenation of Sentosa Island and Pulau Brani.

Beneficiary of Sentosa-Brani Master Plan.

  • Sentosa Island and Pulau Brani will be redeveloped into five distinct zones, namely the Vibrant Cluster, Island Heart, Waterfront, Ridgeline and Beachfront. Each zone will deliver unique experiences, such as nature and heritage trails, adventure attractions, eco-resorts, water shows and beach events. Vibrant Cluster, which spans both islands, will have large-scale attractions. Waterfront on Pulau Brani will house a “futuristic” discovery park.
  • Sentosa-Brani Master Plan will be rolled out over the next 20-30 years. Phase 1 of the Master Plan named “Sentosa Sensoryscape”, a two-tiered linkway connecting Resorts World Sentosa and the Southern Beaches, will be completed in 2022.

Harbourfront precinct at the heart of GSW.

  • Greater Southern Waterfront (GSW) covers 1,000ha of land stretching across the southern coastline from Pasir Panjang to Marina East which will be freed up for development after the City Terminals and Pasir Panjang Terminal relocate to Tuas Mega Port. Keppel Club will be one of the first developments in the GSW. Up to 9,000 new residential homes (both public and private) could be built on the Keppel Club site when the current lease expires in 2021. Residents could easily access VivoCity via the MRT through Labrador Park and Telok Blangah MRT stations on the Circle line.


  • We have raised our 2022F DPU forecast for Mapletree Commercial Trust by 10% to 10.1 cents as rents at VivoCity, MBC I and MBC II have held up much better-than-anticipated during the COVID-19 pandemic.



  • Gradual but steady recovery in shopper traffic and tenant sales, accompanied by progressive easing of social distancing measures.
  • GSW will increase the population of residents staying within VivoCity’s catchment area. Its office buildings, namely MBC I, MBC II, mTower and MLHF will benefit from an expanded pool of potential employees.
  • Development of tourism attractions at Sentosa and Pulau Brani, which will improve shopper traffic and tenant sales at VivoCity.

Jonathan KOH CFA UOB Kay Hian Research | https://research.uobkayhian.com/ 2021-04-29
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